Exhibit 4.1
FRANKLIN TEMPLETON DEFINED CONTRIBUTION SERVICES
DEFINED CONTRIBUTION PLAN
TABLE OF CONTENTS
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ARTICLE I
ARTICLE I DEFINITIONS.........................................................1
ARTICLE II
ADMINISTRATION...............................................................20
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER.........................20
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY.............................21
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES.......................21
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR..............................21
2.5 RECORDS AND REPORTS.................................................23
2.6 APPOINTMENT OF ADVISERS.............................................23
2.7 INFORMATION FROM EMPLOYER...........................................23
2.8 PAYMENT OF EXPENSES.................................................23
2.9 MAJORITY ACTIONS....................................................23
2.10 CLAIMS PROCEDURE...................................................24
2.11 CLAIMS REVIEW PROCEDURE............................................24
ARTICLE III
ARTICLE III ELIGIBILITY......................................................25
3.1 CONDITIONS OF ELIGIBILITY...........................................25
3.2 EFFECTIVE DATE OF PARTICIPATION.....................................25
3.3 DETERMINATION OF ELIGIBILITY........................................25
3.4 TERMINATION OF ELIGIBILITY..........................................26
3.5 REHIRED EMPLOYEES AND BREAKS IN SERVICE.............................26
3.6 ELECTION NOT TO PARTICIPATE.........................................27
3.7 CONTROL OF ENTITIES BY OWNER-EMPLOYEE...............................27
ARTICLE IV
CONTRIBUTION AND ALLOCATION..................................................27
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION.....................27
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION..........................28
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS................28
4.4 MAXIMUM ANNUAL ADDITIONS............................................36
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS...........................42
4.6 ROLLOVERS...........................................................43
4.7 PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS.........................44
4.8 VOLUNTARY EMPLOYEE CONTRIBUTIONS....................................45
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS..........................46
4.10 DIRECTED INVESTMENT ACCOUNT........................................46
4.11 INTEGRATION IN MORE THAN ONE PLAN..................................49
4.12 QUALIFIED MILITARY SERVICE.........................................49
ARTICLE V
VALUATIONS...................................................................49
5.1 VALUATION OF THE TRUST FUND.........................................49
5.2 METHOD OF VALUATION.................................................49
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TABLE OF CONTENTS
(continued)
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ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS....................................50
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT............................50
6.2 DETERMINATION OF BENEFITS UPON DEATH.................................50
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY.....................52
6.4 DETERMINATION OF BENEFITS UPON TERMINATION...........................52
6.5 DISTRIBUTION OF BENEFITS.............................................54
6.6 DISTRIBUTION OF BENEFITS UPON DEATH..................................61
6.7 TIME OF DISTRIBUTION.................................................66
6.8 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY....................66
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN.......................66
6.10 IN-SERVICE DISTRIBUTION.............................................67
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP...................................67
6.12 SPECIAL RULE FOR CERTAIN PROFIT SHARING PLANS.......................68
6.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION.....................69
6.14 DIRECT ROLLOVERS....................................................69
6.15 TRANSFER OF ASSETS FROM A MONEY PURCHASE PLAN.......................70
6.16 ELECTIVE TRANSFERS OF BENEFITS TO OTHER PLANS.......................70
ARTICLE VII
TRUSTEE AND CUSTODIAN.........................................................72
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE................................72
7.2 INVESTMENT POWERS AND DUTIES OF DISCRETIONARY TRUSTEE................73
7.3 INVESTMENT POWERS AND DUTIES OF NONDISCRETIONARY TRUSTEE.............76
7.4 POWERS AND DUTIES OF CUSTODIAN.......................................79
7.5 LIFE INSURANCE.......................................................79
7.6 LOANS TO PARTICIPANTS................................................80
7.7 MAJORITY ACTIONS.....................................................82
7.8 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES........................82
7.9 ANNUAL REPORT OF THE TRUSTEE.........................................82
7.10 AUDIT...............................................................83
7.11 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE......................83
7.12 TRANSFER OF INTEREST................................................84
7.13 TRUSTEE INDEMNIFICATION.............................................84
7.14 EMPLOYER SECURITIES AND REAL PROPERTY...............................84
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS............................................85
8.1 AMENDMENT............................................................85
8.2 TERMINATION..........................................................86
8.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS..........................87
ARTICLE IX
TOP HEAVY PROVISIONS..........................................................87
9.1 TOP HEAVY PLAN REQUIREMENTS..........................................87
9.2 DETERMINATION OF TOP HEAVY STATUS....................................87
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TABLE OF CONTENTS
(continued)
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ARTICLE X
MISCELLANEOUS.................................................................89
10.1 EMPLOYER ADOPTIONS..................................................89
10.2 PARTICIPANT'S RIGHTS................................................90
10.3 ALIENATION..........................................................90
10.4 CONSTRUCTION OF PLAN................................................91
10.5 GENDER AND NUMBER...................................................91
10.6 LEGAL ACTION........................................................91
10.7 PROHIBITION AGAINST DIVERSION OF FUNDS..............................91
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE..........................92
10.9 INSURER'S PROTECTIVE CLAUSE.........................................92
10.10 RECEIPT AND RELEASE FOR PAYMENTS...................................92
10.11 ACTION BY THE EMPLOYER.............................................92
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY.................92
10.13 HEADINGS...........................................................93
10.14 APPROVAL BY INTERNAL REVENUE SERVICE...............................93
10.15 UNIFORMITY.........................................................93
10.16 PAYMENT OF BENEFITS................................................94
ARTICLE XI
PARTICIPATING EMPLOYERS.......................................................94
11.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER.........................94
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS.............................94
11.3 DESIGNATION OF AGENT................................................94
11.4 EMPLOYEE TRANSFERS..................................................95
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES...............95
11.6 AMENDMENT...........................................................95
11.7 DISCONTINUANCE OF PARTICIPATION.....................................95
11.8 ADMINISTRATOR'S AUTHORITY...........................................96
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE...................96
ARTICLE XII
CASH OR DEFERRED PROVISIONS...................................................96
12.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION.....................96
12.2 PARTICIPANT'S SALARY REDUCTION ELECTION.............................97
12.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS...............100
12.4 ACTUAL DEFERRAL PERCENTAGE TESTS...................................103
12.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS.....................106
12.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS...............................110
12.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS.................113
12.8 SAFE HARBOR PROVISIONS.............................................118
12.9 ADVANCE DISTRIBUTION FOR HARDSHIP..................................121
ARTICLE XIII
SIMPLE 401(K) PROVISIONS.....................................................122
13.1 SIMPLE 401(k) PROVISIONS...........................................122
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TABLE OF CONTENTS
(continued)
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13.2 DEFINITIONS........................................................123
13.3 CONTRIBUTIONS......................................................123
13.4 ELECTION AND NOTICE REQUIREMENTS...................................124
13.5 VESTING REQUIREMENTS...............................................125
13.6 TOP-HEAVY RULES....................................................125
13.7 NONDISCRIMINATION TESTS............................................125
iv
ARTICLE I DEFINITIONS
As used in this Plan, the following words and phrases shall have the
meanings set forth herein unless a different meaning is clearly required by the
context:
1.1 "ACP" means the "Actual Contribution Percentage" determined
pursuant to Section 12.6(e).
1.2 "ACT" means the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.3 "ADP" means the "Actual Deferral Percentage" determined pursuant
to Section 12.4(e).
1.4 "ADMINISTRATOR" means the Employer unless another person or
entity has been designated by the Employer pursuant to Section 2.2 to administer
the Plan on behalf of the Employer.
1.5 "ADOPTION AGREEMENT" means the separate agreement which is
executed by the Employer and sets forth the elective provisions of this Plan and
Trust as specified by the Employer.
1.6 "AFFILIATED EMPLOYER" means any corporation which is a member of
a controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.7 "ANNIVERSARY DATE" means the last day of the Plan Year.
1.8 "ANNUITY STARTING DATE" means, with respect to any Participant,
the first day of the first period for which an amount is paid as an annuity, or,
in the case of a benefit not payable in the form of an annuity, the first day on
which all events have occurred which entitles the Participant to such benefit.
1.9 "BENEFICIARY" means the person (or entity) to whom all or a
portion of a deceased Participant's interest in the Plan is payable, subject to
the restrictions of Sections 6.2 and 6.6.
1.10 "CODE" means the Internal Revenue Code of 1986, as amended.
1.11 "COMPENSATION" with respect to any Participant means one of the
following as elected in the Adoption Agreement:
(a) Information required to be reported under Code Sections 6041,
6051 and 6052 (Wages, tips and other compensation as reported on Form
1
W-2). Compensation means wages, within the meaning of Code Section
3401(a), and all other payments of compensation to an Employee by the
Employer (in the course of the Employer's trade or business) for which
the Employer is required to furnish the Employee a written statement
under Code Sections 6041(d), 6051(a)(3) and 6052. Compensation must be
determined without regard to any rules under Code Section 3401 (a)
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)(2)).
(b) Code Section 3401 (a) Wages. Compensation means an Employee's
wages within the meaning of Code Section 3401 (a) for the purposes of
income tax withholding at the source but determined without regard to
any rules that limit the remuneration included in wages based on the
nature or location of the employment or the services performed (such
as the exception for agricultural labor in Code Section 3401(a)(2)).
(c) 415 Safe-Harbor Compensation. Compensation means wages,
salaries, and fees for professional services and other amounts
received (without regard to whether or not an amount is paid in cash)
for personal services actually rendered in the course of employment
with the Employer maintaining the Plan to the extent that the amounts
are includible in gross income (including, but not limited to,
commissions paid salespersons, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements, or other expense
allowances under a nonaccountable plan (as described in Regulation
1.62-2(c))), and excluding the following:
(1) Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for the
taxable year in which contributed, or Employer contributions
under a simplified employee pension plan to the extent such
contributions are excludable from the Employee's gross income, or
any distributions from a plan of deferred compensation;
(2) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(4) Other amounts which receive special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code Section 403(b) (whether or not the
contributions are actually excludable from the gross income of
the Employee).
However, Compensation for any Self-Employed Individual shall be
equal to Earned Income. Compensation shall include only that Compensation which
is actually paid to the Participant during the determination period. Except as
otherwise provided in this Plan, the determination period shall be the period
elected by the Employer in the Adoption Agreement. If the Employer makes no
election, the determination period shall be the Plan Year.
2
Notwithstanding the above, if elected in the Adoption Agreement,
Compensation shall include all of the following types of elective contributions
and all of the following types of deferred compensation:
(a) Elective contributions that are made by the Employer on
behalf of a Participant that are not includible in gross income under
Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b), and for Plan Years
beginning on or after January 1, 2001 (or as of a date, no earlier
than January 1, 1998, as specified in an addendum to the Adoption
Agreement), 132(0(4);
(b) Compensation deferred under an eligible deferred compensation
plan within the meaning of Code Section 457(b); and
(c) Employee contributions (under governmental plans) described
in Code Section 414(h)(2) that are picked up by the employing unit and
thus are treated as Employer contributions.
For Plan Years beginning on or after January 1, 1989, and before
January 1, 1994, the annual Compensation of each Participant taken into account
for determining all benefits provided under the Plan for any Plan Year shall not
exceed $200,000. This limitation shall be adjusted by the Secretary at the same
time and in the same manner as under Code Section 415(d), except that the dollar
increase in effect on January I of any calendar year is effective for Plan Years
beginning in such calendar year and the first adjustment to the $200,000
limitation is effective on January 1, 1990.
For Plan Years beginning on or after January 1, 1994, Compensation
in excess of $150,000 (or such other amount provided in the Code) shall be
disregarded for all purposes other than for purposes of salary deferral
elections. Such amount shall be adjusted by the Commissioner for increases in
the cost-of-living in accordance with Code Section 401(a)(17)(B). The
cost-of-living adjustment in effect for a calendar year applies to any
determination period beginning in such calendar year. If a determination period
consists of fewer than twelve (12) months, the $150,000 annual Compensation
limit will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is twelve (12).
If Compensation for any prior determination period is taken into
account in determining a Participant's allocations for the current Plan Year,
the Compensation for such prior determination period is subject to the
applicable annual Compensation limit in effect for that prior period. For this
purpose, in determining allocations in Plan Years beginning on or after January
1, 1989, the annual compensation limit in effect for determination periods
beginning before that date is $200,000. In addition, in determining allocations
in Plan Years beginning on or after January 1, 1994, the annual Compensation
limit in effect for determination periods beginning before that date is
$150,000.
Notwithstanding the foregoing, except as otherwise elected in a
non-standardized Adoption Agreement, the family member aggregation rules of Code
Sections 401(a)(17) and 414(q)(6) as in effect prior to the enactment of the
Small Business Job Protection Act of 1996 shall not apply to this Plan effective
3
with respect to Plan Years beginning after December 31, 1996.
If, in the Adoption Agreement, the Employer elects to exclude a
class of Employees from the Plan, then Compensation for any Employee who becomes
eligible or ceases to be eligible to participate during a determination period
shall only include Compensation while the Employee is an Eligible Employee.
If, in connection with the adoption of any amendment, the definition
of Compensation has been modified, then, except as otherwise provided herein,
for Plan Years prior to the Plan Year which includes the adoption date of such
amendment, Compensation means compensation determined pursuant to the terms of
the Plan then in effect.
1.12 "CONTRACT" or "POLICY" means any life insurance policy,
retirement income policy, or annuity contract (group or individual) issued by
the Insurer. In the event of any conflict between the terms of this Plan and the
terms of any contract purchased hereunder, the Plan provisions shall control.
1.13 "DESIGNATED INVESTMENT ALTERNATIVE" means a specific investment
identified by name by the Employer (or such other Fiduciary who has been given
the authority to select investment options) as an available investment under the
Plan to which Plan assets may be invested by the Trustee pursuant to the
investment direction of a Participant.
1.14 "DIRECTED INVESTMENT OPTION" means a Designated Investment
Alternative and any other investment permitted by the Plan and the Participant
Direction Procedures to which Plan assets may be invested pursuant to the
investment direction of a Participant.
1.15 "EARLY RETIREMENT DATE" means the date specified in the
Adoption Agreement on which a Participant or Former Participant has satisfied
the requirements specified in the Adoption Agreement (Early Retirement Age). If
elected in the Adoption Agreement, a Participant shall become fully Vested upon
satisfying such requirements if the Participant is still employed at the Early
Retirement Age.
A Former Participant who separates from service after satisfying any
service requirement but before satisfying the age requirement for Early
Retirement Age and who thereafter reaches the age requirement contained herein
shall be entitled to receive benefits under this Plan (other than any
accelerated vesting and allocations of Employer Contributions) as though the
requirements for Early Retirement Age had been satisfied.
1.16 "EARNED INCOME" means the net earnings from self-employment in
the trade or business with respect to which the Plan is established, for which
the personal services of the individual are a material income-producing factor.
Net earnings will be determined without regard to items not included in gross
income and the deductions allocable to such items. Net earnings are reduced by
contributions made by the Employer to a qualified plan to the extent deductible
under Code Section 404. In addition, net earnings shall be determined with
regard to the deduction allowed to the taxpayer by Code Section 164(f), for
taxable years beginning after December 31, 1989.
4
1.17 "ELECTIVE DEFERRALS" means the Employer's contributions to the
Plan that are made pursuant to a Participant's deferral election pursuant to
Section 12.2, excluding any such amounts distributed as "excess annual
additions" pursuant to Section 4.5. Elective Deferrals shall be subject to the
requirements of Sections 12.2(b) and 12.2(c) and shall, except as otherwise
provided herein, be required to satisfy the nondiscrimination requirements of
Regulation 1.40 1 (k)- I (b)(2), the provisions of which are specifically
incorporated herein by reference.
1.18 "ELIGIBLE EMPLOYEE" means any Eligible Employee as elected in
the Adoption Agreement and as provided herein. With respect to a
non-standardized Adoption Agreement, an individual shall not be an "Eligible
Employee" if such individual is not reported on the payroll records of the
Employer as a common law employee. In particular, it is expressly intended that
individuals not treated as common law employees by the Employer on its payroll
records are not "Eligible Employees" and are excluded from Plan participation
even if a court or administrative agency determines that such individuals are
common law employees and not independent contractors. Furthermore, with respect
to a non-standardized Adoption Agreement, Employees of an Affiliated Employer
will not be treated as "Eligible Employees" prior to the date the Affiliated
Employer adopts the Plan as a Participating Employer.
Except as otherwise provided in this paragraph, if the Employer does
not elect in the Adoption Agreement to include Employees who became Employees as
the result of a "Code Section 410(b)(6)(C) transaction," then such Employees
will only be "Eligible Employees" after the expiration of the transition period
beginning on the date of the transaction and ending on the last day of the first
Plan Year beginning after the date of the transaction. A "Code Section
410(b)(6)(C) transaction" is an asset or stock acquisition, merger, or similar
transaction involving a change in the Employer of the Employees of a trade or
business that is subject to the special rules set forth in Code Section
410(b)(6)(C). However, regardless of any election made in the Adoption
Agreement, if a separate entity becomes an Affiliate Employer as the result of a
"Code Section 410(b)(6)(C) transaction," then Employees of such separate entity
will not be treated as "Eligible Employees" prior to the date the entity adopts
the Plan as a Participating Employer or, with respect to a standardized Adoption
Agreement, if earlier, the expiration of the transition period set forth above.
If, in the Adoption Agreement, the Employer elects to exclude union
employees, then Employees whose employment is governed by a collective
bargaining agreement between the Employer and "employee representatives" under
which retirement benefits were the subject of good faith bargaining and if two
percent (2%) or less of the Employees covered pursuant to that agreement are
professionals as defined in Regulation 1.410(b)-9, shall not be eligible to
participate in this Plan. For this purpose, the term "employee representatives"
does not include any organization more than half of whose members are employees
who are owners, officers, or executives of the Employer.
If, in the Adoption Agreement, the Employer elects to exclude
non-resident aliens, then Employees who are non-resident aliens (within the
meaning of Code Section 7701(b)(1)(B)) who received no earned income (within the
meaning of Code Section 911 (d)(2)) from the Employer which constitutes income
from sources within the United States (within the meaning of Code Section
861(a)(3)) shall not be eligible to participate in this Plan.
5
1.19 "EMPLOYEE" means any person who is employed by the Employer.
The term "Employee" shall also include any person who is an employee of an
Affiliated Employer and any Leased Employee deemed to be an Employee as provided
in Code Section 414(n) or (o).
1.20 "EMPLOYER" means the entity specified in the Adoption
Agreement, any successor which shall maintain this Plan and any predecessor
which has maintained this Plan. In addition, unless the context means otherwise,
the term "Employer" shall include any Participating Employer (as defined in
Section 11.1) which shall adopt this Plan.
1.21 "EXCESS AGGREGATE CONTRIBUTIONS" means, with respect to any
Plan Year, the excess of:
(a) The aggregate "Contribution Percentage Amounts" (as defined
in Section 12.6) actually made on behalf of Highly Compensated
Participants for such Plan Year and taken into account in computing
the numerator of the ACP, over
(b) The maximum "Contribution Percentage Amounts" permitted by
the ACP test in Section 12.6 (determined by reducing contributions
made on behalf of Highly Compensated Participants in order of their
"Contribution Percentages" beginning with the highest of such
percentages).
Such determination shall be made after first taking into account
corrections of any Excess Deferrals pursuant to Section 12.2 and then taking
into account adjustments of any Excess Contributions pursuant to Section 12.5.
1.22 "EXCESS COMPENSATION" means, with respect to a Plan that is
integrated with Social Security (permitted disparity), a Participant's
Compensation which is in excess of the integration level elected in the Adoption
Agreement.
However, if Compensation is based on less than a twelve (12) month
determination period, Excess Compensation shall be determined by reducing the
integration level by a fraction, the numerator of which is the number of full
months in the short period and the denominator of which is twelve (12).
1.23 "EXCESS CONTRIBUTIONS" means, with respect to any Plan Year,
the excess of:
(a) The aggregate amount of Employer contributions actually made
on behalf of Highly Compensated Participants for such Plan Year and
taken into account in computing the numerator of the ADP, over
(b) The maximum amount of such contributions permitted by the ADP
test in Section 12.4 (determined by hypothetically reducing
contributions made on behalf of Highly Compensated Participants in
order of the actual deferral ratios, beginning with the highest of
such ratios).
In determining the amount of Excess Contributions to be distributed
and/or recharacterized with respect to an affected Highly Compensated
Participant as determined herein, such amount shall be reduced by any Excess
Deferrals previously distributed to such affected Highly Compensated Participant
6
for the Participant's taxable year ending with or within such Plan Year.
1.24 "EXCESS DEFERRALS" means, with respect to any taxable year of a
Participant, those elective deferrals (within the meaning of Code Section
402(g)) that are includible in the Participant's gross income under Code Section
402(g) to the extent such Participant's elective deferrals for the taxable year
exceed the dollar limitation under such Code Section. Excess Deferrals shall be
treated as an "Annual Addition" pursuant to Section 4.4 when contributed to the
Plan unless distributed to the affected Participant not later than the first
April 15th following the close of the Participant's taxable year in which the
Excess Deferral was made. Additionally, for purposes of Sections 4.3(f) and 9.2,
Excess Deferrals shall continue to be treated as Employer contributions even if
distributed pursuant to Section 12.2(e). However, Excess Deferrals of Non-Highly
Compensated Participants are not taken into account for purposes of Section
12.4.
1.25 "FIDUCIARY" means any person who (a) exercises any
discretionary authority or discretionary control respecting management of the
Plan or exercises any authority or control respecting management or disposition
of its assets, (b) renders investment advice for a fee or other compensation,
direct or indirect, with respect to any monies or other property of the Plan or
has any authority or responsibility to do so, or (c) has any discretionary
authority or discretionary responsibility in the administration of the Plan.
1.26 "FISCAL YEAR" means the Employer's accounting year.
1.27 "FORFEITURE" means, with respect to a Former Participant who
has severed employment, that portion of the Participant's Account that is not
Vested. Unless otherwise elected in the Adoption Agreement, Forfeitures occur
pursuant to (a) below.
(a) A Forfeiture will occur on the earlier of:
(1) The last day of the Plan Year in which a Former Participant
who has severed employment with the Employer incurs five (5)
consecutive 1-Year Breaks in Service, or
(2) The distribution of the entire Vested portion of the
Participant's Account of a Former Participant who has severed
employment with the Employer. For purposes of this provision, if
the Former Participant has a Vested benefit of zero, then such
Former Participant shall be deemed to have received a
distribution of such Vested benefit as of the year in which the
severance of employment occurs.
(b) If elected in the Adoption Agreement, a Forfeiture will occur
as of the last day of the Plan Year in which the Former Participant
incurs five (5) 1-Year Breaks in Service.
Regardless of the preceding provisions, if a Former Participant is
eligible to share in the allocation of Employer contributions or Forfeitures in
the year in which the Forfeiture would otherwise occur, then the Forfeiture will
not occur until the end of the first Plan Year for which the Former Participant
is not eligible to share in the allocation of Employer contributions or
7
Forfeitures. Furthermore, the term "Forfeiture" shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.
1.28 "FORMER PARTICIPANT" means a person who has been a Participant,
but who has ceased to be a Participant for any reason.
1.29 "414(S) COMPENSATION" means any definition of compensation that
satisfies the nondiscrimination requirements of Code Section 414(s) and the
Regulations thereunder. The period for determining 414(s) Compensation must be
either the Plan Year or the calendar year ending with or within the Plan Year.
An Employer may further limit the period taken into account to that part of the
Plan Year or calendar year in which an Employee was a Participant in the
component of the Plan being tested. The period used to determine 414(s)
Compensation must be applied uniformly to all Participants for the Plan Year.
1.30 "415 COMPENSATION" means, with respect to any Participant, such
Participant's (a) Wages, tips and other compensation on Form W-2, (b) Section
3401 (a) wages or (c) 415 safe-harbor compensation as elected in the Adoption
Agreement for purposes of Compensation. 415 Compensation shall be based on the
full Limitation Year regardless of when participation in the Plan commences.
Furthermore, regardless of any election made in the Adoption Agreement, with
respect to Limitation Years beginning after December 31, 1997, 415 Compensation
shall include any elective deferral (as defined in Code Section 402(g)(3)) and
any amount which is contributed or deferred by the Employer at the election of
the Participant and which is not includible in the gross income of the
Participant by reason of Code Section 125, 457, and, for Limitation Years
beginning on or after January 1, 2001 (or as of a date, no earlier than January
1, 1998, as specified in an addendum to the Adoption Agreement), 132(f)(4). For
Limitation Years beginning prior to January 1, 1998, 415 Compensation shall
exclude such amounts.
Except as otherwise provided herein, if, in connection with the
adoption of any amendment, the definition of 415 Compensation has been modified,
then for Plan Years prior to the Plan Year which includes the adoption date of
such amendment, 415 Compensation means compensation determined pursuant to the
terms of the Plan then in effect.
1.31 "HIGHLY COMPENSATED EMPLOYEE" means, effective for Plan Years
beginning after December 31, 1996, an Employee described in Code Section 414(q)
and the Regulations thereunder, and generally means any Employee who:
(a) was a "five percent (5%) owner" as defined in Section 1.37(c)
at any time during the "determination year" or the "look-back year";
or
(b) for the "look-back year" had 415 Compensation from the
Employer in excess of $80,000 and, if elected in the Adoption
Agreement, was in the Top-Paid Group for the "look-back year." The
$80,000 amount is adjusted at the same time and in the same manner as
under Code Section 415(d), except that the base period is the calendar
quarter ending September 30, 1996.
The "determination year" means the Plan Year for which testing is
being performed and the "look-back year" means the immediately preceding twelve
(12) month period. However, if the calendar year data election is made in the
Adoption Agreement, for purposes of (b) above, the "look-back year" shall be the
8
calendar year beginning within the twelve (12) month period immediately
preceding the "determination year." Notwithstanding the preceding sentence, if
the calendar year data election is effective with respect to a Plan Year
beginning in 1997, then for such Plan Year the "look-back year" shall be the
calendar year ending with or within the Plan Year for which testing is being
performed, and the "determination year" shall be the period of time, if any,
which extends beyond the "look-back year" and ends on the last day of the Plan
Year for which testing is being performed.
A highly compensated former employee is based on the rules
applicable to determining highly compensated employee status as in effect for
that "determination year," in accordance with Regulation 1.414(q)-IT, A-4 and
IRS Notice 97-45 (or any superseding guidance).
In determining whether an employee is a Highly Compensated Employee
for a Plan Year beginning in 1997, the amendments to Code Section 414(q) stated
above are treated as having been in effect for years beginning in 1996.
For purposes of this Section, for Plan Years beginning prior to
January 1, 1998, the determination of 415 Compensation shall be made by
including amounts that would otherwise be excluded from a Participant's gross
income by reason of the application of Code Sections 125, 402(e)(3),
402(h)(1)(B) and, for Plan Years beginning on or after January 1, 2001 (or as of
a date, no earlier than January 1, 1998, as specified in an addendum to the
Adoption Agreement), 132(f)(4), and, in the case of Employer contributions made
pursuant to a salary reduction agreement, Code Section 403(b).
In determining who is a Highly Compensated Employee, Employees who
are non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)) from the Employer constituting United States source income
within the meaning of Code Section 861(a)(3) shall not be treated as Employees.
Additionally, all Affiliated Employers shall be taken into account as a single
employer and Leased Employees within the meaning of Code Sections 414(n)(2) and
414(o)(2) shall be considered Employees unless such Leased Employees are covered
by a plan described in Code Section 414(n)(5) and are not covered in any
qualified plan maintained by the Employer. The exclusion of Leased Employees for
this purpose shall be applied on a uniform and consistent basis for all of the
Employer's retirement plans.
1.32 "HIGHLY COMPENSATED PARTICIPANT" means any Highly Compensated
Employee who is eligible to participate in the component of the Plan being
tested.
1.33 "HOUR OF SERVICE" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period (these
hours will be credited to the Employee for the computation period in which the
duties are performed); (2) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Employer (irrespective
of whether the employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays, sickness, incapacity
(including disability), jury duty, lay-off, military duty or leave of absence)
during the applicable computation period (these hours will be calculated and
credited pursuant to Department of Labor regulation 2530.200b-2 which is
incorporated herein by reference); (3) each hour for which back pay is awarded
or agreed to by the Employer without regard to mitigation of damages (these
9
hours will be credited to the Employee for the computation period or periods to
which the award or agreement pertains rather than the computation period in
which the award, agreement or payment is made). The same Hours of Service shall
not be credited both under (1) or (2), as the case may be, and under (3).
Notwithstanding (2) above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable workers' compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee. Furthermore, for
purposes of (2) above, a payment shall be deemed to be made by or due from the
Employer regardless of whether such payment is made by or due from the Employer
directly, or indirectly through, among others, a trust fund, or insurer, to
which the Employer contributes or pays premiums and regardless of whether
contributions made or due to the trust fund, insurer, or other entity are for
the benefit of particular Employees or are on behalf of a group of Employees in
the aggregate.
Hours of Service will be credited for employment with all Affiliated
Employers and for any individual considered to be a Leased Employee pursuant to
Code Section 414(n) or 414(o) and the Regulations thereunder. Furthermore, the
provisions of Department of Labor regulations 2530.200b-2(b) and (c) are
incorporated herein by reference.
Hours of Service will be determined on the basis of the method
elected in the Adoption Agreement.
1.34 "INSURER" means any legal reserve insurance company which has
issued or shall issue one or more Contracts or Policies under the Plan.
1.35 "INVESTMENT MANAGER" means a Fiduciary as described in Act
Section 3(38).
1.36 "JOINT AND SURVIVOR ANNUITY" means an annuity for the life of a
Participant with a survivor annuity for the life of the Participant's spouse
which is not less than fifty percent (50%), nor more than one-hundred percent
(100%) of the amount of the annuity payable during the joint lives of the
Participant and the Participant's spouse which can be purchased with the
Participant's Vested interest in the Plan reduced by any outstanding loan
balances pursuant to Section 7.6.
1.37 "KEY EMPLOYEE" means an Employee as defined in Code Section
416(i) and the Regulations thereunder. Generally, any Employee or former
Employee (as well as each of such Employee's or former Employee's Beneficiaries)
is considered a Key Employee if, the individual at any time during the Plan Year
that contains the "Determination Date" (as defined in Section 9.2(c)) or any of
the preceding four (4) Plan Years, has been included in one of the following
categories:
10
(a) an officer of the Employer (as that term is defined within
the meaning of the Regulations under Code Section 416) having annual
415 Compensation greater than fifty percent (50%) of the amount in
effect under Code Section 415(b)( I )(A) for any such Plan Year;
(b) one of the ten Employees having annual 415 Compensation from
the Employer for a Plan Year greater than the dollar limitation in
effect under Code Section 415(c)(1)(A) for the calendar year in which
such Plan Year ends and owning (or considered as owning within the
meaning of Code Section 318) both more than one-half percent (1/2%)
interest and the largest interests in the Employer;
(c) a "five percent (5%) owner" of the Employer. "Five percent
(5%) owner" means any person who owns (or is considered as owning
within the meaning of Code Section 318) more than five percent (5%) of
the value of the outstanding stock of the Employer or stock possessing
more than five percent (5%) of the total combined voting power of all
stock of the Employer or, in the case of an unincorporated business,
any person who owns more than five percent (5%) of the capital or
profits interest in the Employer; and
(d) a "one percent (1 %) owner" of the Employer having annual 415
Compensation from the Employer of more than $150,000. "One percent (1
%) owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than one percent (M) of the
value of the outstanding stock of the Employer or stock possessing
more than one percent (M) of the total combined voting power of all
stock of the Employer or, in the case of an unincorporated business,
any person who owns more than one percent (1 %) of the capital or
profits interest in the Employer.
In determining percentage ownership hereunder, employers that would
otherwise be aggregated under Code Sections 414(b), (c), (m) and (o) shall be
treated as separate employers. In determining whether an individual has 415
Compensation of more than $150,000, 415 Compensation from each employer required
to be aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken
into account. Furthermore, for purposes of this Section, for Plan Years
beginning prior to January 1, 1998, the determination of 415 Compensation shall
be made by including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of Code Sections 125,
402(e)(3), 402(h)(1)(B) and, for Plan Years beginning on or after January 1,
2001 (or as of a date, no earlier than January 1, 1998, as specified in an
addendum to the Adoption Agreement), 132(f)(4), and, in the case of Employer
contributions made pursuant to a salary reduction agreement, Code Section
403(b).
1.38 "LATE RETIREMENT DATE" means the date of, or the first day of
the month or the Anniversary Date coinciding with or next following, whichever
corresponds to the election in the Adoption Agreement for the Normal Retirement
Date, a Participant's actual retirement after having reached the Normal
Retirement Date.
1.39 "LEASED EMPLOYEE" means, effective with respect to Plan Years
beginning on or after January 1, 1997, any person (other than an Employee of the
recipient Employer) who, pursuant to an agreement between the recipient Employer
11
and any other person or entity ("leasing organization"), has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time basis for a
period of at least one year, and such services are performed under primary
direction or control by the recipient Employer. Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable to
services performed for the recipient Employer shall be treated as provided by
the recipient Employer. Furthermore, Compensation for a Leased Employee shall
only include Compensation from the leasing organization that is attributable to
services performed for the recipient Employer.
A Leased Employee shall not be considered an employee of the
recipient Employer if: (a) such employee is covered by a money purchase pension
plan providing: (1) a nonintegrated employer contribution rate of at least ten
percent (10%) of compensation, as defined in Code Section 415(c)(3), but for
Plan Years beginning prior to January 1, 1998, including amounts contributed
pursuant to a salary reduction agreement which are excludable from the
employee's gross income under Code Sections 125, 402(e)(3), 402(h)(1)(B),
403(b), or for Plan Years beginning on or after January 1, 2001 (or as of a
date, no earlier than January 1, 1998, as specified in an addendum to the
Adoption Agreement), 132(0(4), (2) immediate participation, and (3) full and
immediate vesting; and (b) leased employees do not constitute more than twenty
percent (20%) of the recipient Employer's nonhighly compensated workforce.
1.40 "LIMITATION YEAR" means the determination period used to
determine Compensation. However, the Employer may elect a different Limitation
Year in the Adoption Agreement or by adopting a written resolution to such
effect. All qualified plans maintained by the Employer must use the same
Limitation Year. Furthermore, unless there is a change to a new Limitation Year,
the Limitation Year will be a twelve (12) consecutive month period. In the case
of an initial Limitation Year, the Limitation Year will be the twelve (12)
consecutive month period ending on the last day of the period specified in the
Adoption
Agreement (or written resolution). If the Limitation Year is amended
to a different twelve (12) consecutive month period, the new "Limitation Year"
must begin on a date within the "Limitation Year" in which the amendment is
made.
1.41 "NET PROFIT" means, with respect to any Fiscal Year, the
Employer's net income or profit for such Fiscal Year determined upon the basis
of the Employer's books of account in accordance with generally accepted
accounting principles, without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan and any other qualified plan.
1.42 "NON-ELECTIVE CONTRIBUTION" means the Employer's contributions
to the Plan other than Elective Deferrals, any Qualified Non-Elective
Contributions and any Qualified Matching Contributions. Employer matching
contributions which are not Qualified Matching Contributions shall be considered
a Non-Elective Contribution for purposes of the Plan.
1.43 "NON-HIGHLY COMPENSATED PARTICIPANT" means any Participant who
is not a Highly Compensated Employee. However, if pursuant to Sections 12.4 or
12.6 the prior year testing method is used to calculate the ADP or the ACP, a
Non-Highly Compensated Participant shall be determined using the definition of
12
Highly Compensated Employee in effect for the preceding Plan Year.
1.44 "NON-KEY EMPLOYEE" means any Employee or former Employee (and
such Employee's or former Employee's Beneficiaries) who is not, and has never
been, a Key Employee.
1.45 "NORMAL RETIREMENT AGE" means the age elected in the Adoption
Agreement at which time a Participant's Account shall be nonforfeitable (if the
Participant is employed by the Employer on or after that date).
1.46 "NORMAL RETIREMENT DATE" means the date elected in the Adoption
Agreement.
1.47 "1-YEAR BREAK IN SERVICE" means, if the Hour of Service Method
is elected in the Adoption Agreement, the applicable computation period during
which an Employee or former Employee has not completed more than 500 Hours of
Service. Further, solely for the purpose of determining whether an Employee has
incurred a 1-Year Break in Service, Hours of Service shall be recognized for
"authorized leaves of absence" and "maternity and paternity leaves of absence."
For this purpose, Hours of Service shall be credited for the computation period
in which the absence from work begins, only if credit therefore is necessary to
prevent the Employee from incurring a I-Year Break in Service, or, in any other
case, in the immediately following computation period. The Hours of Service
credited for a "maternity or paternity leave of absence" shall be those which
would normally have been credited but for such absence, or, in any case in which
the Administrator is unable to determine such hours normally credited, eight (8)
Hours of Service per day. The total Hours of Service required to be credited for
a "maternity or paternity leave of absence" shall not exceed the number of Hours
of Service needed to prevent the Employee from incurring a I-Year Break in
Service.
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means an absence from
work for any period by reason of the Employee's pregnancy, birth of the
Employee's child, placement of a child with the Employee in connection with the
adoption of such child, or any absence for the purpose of caring for such child
for a period immediately following such birth or placement.
If the Elapsed Time Method is elected in the Adoption Agreement, a
"l-Year Break in Service" means a twelve (12) consecutive month period beginning
on the severance from service date or any anniversary thereof and ending on the
next succeeding anniversary of such date; provided, however, that the Employee
or former Employee does not perform an Hour of Service for the Employer during
such twelve (12) consecutive month period.
1.48 "OWNER-EMPLOYEE" means a sole proprietor who owns the entire
interest in the Employer or a partner (or member in the case of a limited
liability company treated as a partnership or sole proprietorship for federal
income tax purposes) who owns more than ten percent (10%) of either the capital
interest or the profits interest in the Employer and who receives income for
personal services from the Employer.
13
1.49 "PARTICIPANT" means any Eligible Employee who has satisfied the
requirements of Section 3.2 and has not for any reason become ineligible to
participate further in the Plan.
1.50 "PARTICIPANT DIRECTED ACCOUNT" means that portion of a
Participant's interest in the Plan with respect to which the Participant has
directed the investment in accordance with the Participant Direction Procedures.
1.51 "PARTICIPANT DIRECTION PROCEDURES" means such instructions,
guidelines or policies, the terms of which are incorporated herein, as shall be
established pursuant to Section 4.10 and observed by the Administrator and
applied and provided to Participants who have Participant Directed Accounts.
1.52 "PARTICIPANT'S ACCOUNT" means the account established and
maintained by the Administrator for each Participant with respect to such
Participant's total interest under the Plan resulting from (a) the Employer's
contributions in the case of a Profit Sharing Plan or Money Purchase Plan, and
(b) the Employer's Non-Elective Contributions in the case of a 401(k) Profit
Sharing Plan. Separate accountings shall be maintained with respect to that
portion of a Participant's Account attributable to Employer matching
contributions and to Employer discretionary contributions made pursuant to
Section 12.1(a)(3).
1.53 "PARTICIPANT'S COMBINED ACCOUNT" means the total aggregate
amount of a Participant's interest under the Plan resulting from Employer
contributions (including Elective Deferrals).
1.54 "PARTICIPANT'S ELECTIVE DEFERRAL ACCOUNT" means the account
established and maintained by the Administrator for each Participant with
respect to such Participant's total interest in the Plan resulting from Elective
Deferrals. Amounts in the Participant's Elective Deferral Account are
nonforfeitable when made and are subject to the distribution restrictions of
Section 12.2(c).
1.55 "PARTICIPANT'S ROLLOVER ACCOUNT" means the account established
and maintained by the Administrator for each Participant with respect to such
Participant's interest in the Plan resulting from amounts transferred from
another qualified plan or "conduit" Individual Retirement Account in accordance
with Section 4.6.
1.56 "PARTICIPANT'S TRANSFER ACCOUNT" means the account established
and maintained by the Administrator for each Participant with respect to the
total interest in the Plan resulting from amounts transferred to this Plan from
a direct plan-to-plan transfer in accordance with Section 4.7.
1.57 "PERIOD OF SERVICE" means the aggregate of all periods
commencing with an Employee's first day of employment or reemployment with the
Employer or an Affiliated Employer and ending on the first day of a Period of
Severance. The first day of employment or reemployment is the first day the
Employee performs an Hour of Service. An Employee will also receive partial
credit for any Period of Severance of less than twelve (12) consecutive months.
Fractional periods of a year will be expressed in terms of days.
14
Periods of Service with any Affiliated Employer shall be recognized.
Furthermore, Periods of Service with any predecessor employer that maintained
this Plan shall be recognized. Periods of Service with any other predecessor
employer shall be recognized as elected in the Adoption Agreement.
In determining Periods of Service for purposes of vesting under the
Plan, Periods of Service will be excluded as elected in the Adoption Agreement
and as specified in Section 3.5.
In the event the method of crediting service is amended from the
Hour of Service Method to the Elapsed Time Method, an Employee will receive
credit for a Period of Service consisting of:
(a) A number of years equal to the number of Years of Service
credited to the Employee before the computation period during which
the amendment occurs; and
(b) The greater of (1) the Periods of Service that would be
credited to the Employee under the Elapsed Time Method for service
during the entire computation period in which the transfer occurs or
(2) the service taken into account under the Hour of Service Method as
of the date of the amendment.
In addition, the Employee will receive credit for service subsequent
to the amendment commencing on the day after the last day of the computation
period in which the transfer occurs.
1.58 "PERIOD OF SEVERANCE" means a continuous period of time during
which an Employee is not employed by the Employer. Such period begins on the
date the Employee retires, quits or is discharged, or if earlier, the twelve
(12) month anniversary of the date on which the Employee was otherwise first
absent from service.
In the case of an individual who is absent from work for "maternity
or paternity" reasons, the twelve (12) consecutive month period beginning on the
first anniversary of the first day of such absence shall not constitute a one
year Period of Severance. For purposes of this paragraph, an absence from work
for "maternity or paternity" reasons means an absence (a) by reason of the
pregnancy of the individual, (b) by reason of the birth of a child of the
individual, (c) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or (d) for
purposes of caring for such child for a period beginning immediately following
such birth or placement.
1.59 "PLAN" means this instrument (hereinafter referred to as
Franklin Templeton Defined Contribution Services Defined Contribution Plan Basic
Plan Document #01) and the Adoption Agreement as adopted by the Employer,
including all amendments thereto and any addendum which is specifically
permitted pursuant to the terms of the Plan.
1.60 "PLAN YEAR" means the Plan's accounting year as specified in
the Adoption Agreement. Unless there is a Short Plan Year, the Plan Year will be
a twelve-consecutive month period.
1.61 "PRE-RETIREMENT SURVIVOR ANNUITY" means an immediate annuity
for the life of a Participant's spouse, the payments under which must be equal
to the benefit which can be provided with the percentage, as specified in the
15
Adoption Agreement, of the Participant's Vested interest in the Plan as of the
date of death. If no election is made in the Adoption Agreement, the percentage
shall be equal to fifty percent (50%). Furthermore, if less than one hundred
percent (100%) of the Participant's Vested interest in the Plan is used to
provide the Pre-Retirement Survivor Annuity, a proportionate share of each of
the Participant's accounts shall be used to provide the Pre-Retirement Survivor
Annuity.
1.62 "QUALIFIED MATCHING CONTRIBUTION" means any Employer matching
contributions that are made pursuant to Sections 12.1(a)(2) if elected in the
Adoption Agreement, 12.5 and 12.7.
1.63 "QUALIFIED MATCHING CONTRIBUTION ACCOUNT" means the account
established hereunder to which Qualified Matching Contributions are allocated.
Amounts in the Qualified Matching Contribution Account are nonforfeitable when
made and are subject to the distribution restrictions of Section 12.2(c).
1.64 "QUALIFIED NON-ELECTIVE CONTRIBUTION" means the Employer's
contributions to the Plan that are made pursuant to Sections 12.1(a)(4) if
elected in the Adoption Agreement, 12.5 and 12.7.
1.65 "QUALIFIED NON-ELECTIVE CONTRIBUTION ACCOUNT" means the account
established hereunder to which Qualified Non-Elective Contributions are
allocated. Amounts in the Qualified Non-Elective Contribution Account are
nonforfeitable when made and are subject to the distribution restrictions of
Section 12.2(c).
1.66 "QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTION ACCOUNT" means the
account established hereunder to which a Participant's tax deductible qualified
voluntary employee contributions made pursuant to Section 4.9 are allocated.
1.67 "REGULATION" means the Income Tax Regulations as promulgated by
the Secretary of the Treasury or a delegate of the Secretary of the Treasury,
and as amended from time to time.
1.68 "RETIRED PARTICIPANT" means a person who has been a
Participant, but who has become entitled to retirement benefits under the Plan.
1.69 "RETIREMENT DATE" means the date as of which a Participant
retires for reasons other than Total and Permanent Disability, regardless of
whether such retirement occurs on a Participant's Normal Retirement Date, Early
Retirement Date or Late Retirement Date (see Section 6.1).
1.70 "SELF-EMPLOYED INDIVIDUAL" means an individual who has Earned
Income for the taxable year from the trade or business for which the Plan is
established, and, also, an individual who would have had Earned Income but for
the fact that the trade or business had no net profits for the taxable year. A
Self-Employed Individual shall be treated as an Employee.
1.71 "SHAREHOLDER-EMPLOYEE" means a Participant who owns (or is
deemed to own pursuant to Code Section 318(a)(1)) more than five percent (5%) of
the Employer's outstanding capital stock during any year in which the Employer
16
elected to be taxed as a Small Business Corporation (S Corporation) under the
applicable Code sections relating to Small Business Corporations.
1.72 "SHORT PLAN YEAR" means, if specified in the Adoption
Agreement, a Plan Year of less than a twelve (12) month period. If there is a
Short Plan Year, the following rules shall apply in the administration of this
Plan. In determining whether an Employee has completed a Year of Service (or
Period of Service if the Elapsed Time Method is used) for benefit accrual
purposes in the Short Plan Year, the number of the Hours of Service (or months
of service if the Elapsed Time Method is used) required shall be proportionately
reduced based on the number of days (or months) in the Short Plan Year. The
determination of whether an Employee has completed a Year of Service (or Period
of Service) for vesting and eligibility purposes shall be made in accordance
with Department of Labor regulation 2530.203-2(c). In addition, if this Plan is
integrated with Social Security, then the integration level shall be
proportionately reduced based on the number of months in the Short Plan Year.
1.73 "SUPER TOP HEAVY PLAN" means a plan which would be a Top Heavy
Plan if sixty percent (60%) is replaced with ninety percent (90%) in Section
9.2(a). However, effective as of the first Plan Year beginning after December
31, 1999, no Plan shall be considered a Super Top Heavy Plan.
1.74 "TAXABLE WAGE BASE" means, with respect to any Plan Year, the
contribution and benefit base under Section 230 of the Social Security Act at
the beginning of such Plan Year.
1.75 "TERMINATED PARTICIPANT" means a person who has been a
Participant, but whose employment has been terminated other than by death, Total
and Permanent Disability or retirement.
1.76 "TOP HEAVY PLAN" means a plan described in Section 9.2(a).
1.77 "TOP HEAVY PLAN YEAR" means a Plan Year commencing after
December 31, 1983, during which the Plan is a Top Heavy Plan.
1.78 "TOP-PAID GROUP" shall be determined pursuant to Code Section
414(q) and the Regulations thereunder and generally means the top twenty percent
(20%) of Employees who performed services for the Employer during the applicable
year, ranked according to the amount of 415 Compensation received from the
Employer during such year. All Affiliated Employers shall be taken into account
as a single employer, and Leased Employees shall be treated as Employees if
required pursuant to Code Section 414(n) or (o). Employees who are non-resident
aliens who received no earned income (within the meaning of Code Section 911
(d)(2)) from the Employer constituting United States source income within the
meaning of Code Section 861(a)(3) shall not be treated as Employees.
Furthermore, for the purpose of determining the number of active Employees in
any year, the following additional Employees may also be excluded, however, such
Employees shall still be considered for the purpose of identifying the
particular Employees in the Top-Paid Group:
(a) Employees with less than six (6) months of service;
17
(b) Employees who normally work less than 17 1/2 hours per week;
(c) Employees who normally work less than six (6) months during a
year; and
(d) Employees who have not yet attained age twenty-one (21).
In addition, if ninety percent (90%) or more of the Employees of the
Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Employer, and the Plan covers only Employees who are not covered under such
agreements, then Employees covered by such agreements shall be excluded from
both the total number of active Employees as well as from the identification of
particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied
on a uniform and consistent basis for all purposes for which the Code Section
414(q) definition is applicable. Furthermore, in applying such exclusions, the
Employer may substitute any lesser service, hours or age.
1.79 "TOTAL AND PERMANENT DISABILITY" means the inability to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
twelve (12) months. The disability of a Participant shall be determined by a
licensed physician chosen by the Administrator. However, if the condition
constitutes total disability under the federal Social Security Acts, the
Administrator may rely upon such determination that the Participant is Totally
and Permanently Disabled for the purposes of this Plan. The determination shall
be applied uniformly to all Participants.
1.80 "TRUSTEE" means the person or entity named in the Adoption
Agreement, or any successors thereto.
If the sponsor of this prototype is a bank, savings and loan, trust
company, credit union or similar institution, a person or entity other than the
prototype sponsor (or its affiliates or subsidiaries) may not serve as Trustee
without the written consent of the sponsor.
1.81 "TRUST FUND" means the assets of the Plan and Trust as the same
shall exist from time to time.
1.82 "VALUATION DATE" means the date or dates specified in the
Adoption Agreement. Regardless of any election to the contrary, the Valuation
Date shall include the Anniversary Date and may include any other date or dates
deemed necessary or appropriate by the Administrator for the valuation of
Participants' Accounts during the Plan Year, which may include any day that the
Trustee, any transfer agent appointed by the Trustee or the Employer, or any
stock exchange used by such agent, are open for business.
1.83 "VESTED" means the nonforfeitable portion of any account
maintained on behalf of a Participant.
18
1.84 "VOLUNTARY CONTRIBUTION ACCOUNT" means the account established
and maintained by the Administrator for each Participant with respect to such
Participant's total interest in the Plan resulting from the Participant's
after-tax voluntary Employee contributions made pursuant to Section 4.7.
Amounts recharacterized as after-tax voluntary Employee
contributions pursuant to Section 12.5 shall remain subject to the limitations
of Section 12.2. Therefore, a separate accounting shall be maintained with
respect to that portion of the Voluntary Contribution Account attributable to
after-tax voluntary Employee contributions made pursuant to Section 4.8.
1.85 "YEAR OF SERVICE" means the computation period of twelve (12)
consecutive months, herein set forth, and during which an Employee has completed
at least 1,000 Hours of Service (unless a lower number of Hours of Service is
specified in the Adoption Agreement).
For purposes of eligibility for participation, the initial
computation period shall begin with the date on which the Employee first
performs an Hour of Service (employment commencement date). The initial
computation period beginning after a l-Year Break in Service shall be measured
from the date on which an Employee again performs an Hour of Service. Unless
otherwise elected in the Adoption Agreement, the succeeding computation periods
shall begin on the anniversary of the Employee's employment commencement date.
However, unless otherwise elected in the Adoption Agreement, if one (1) Year of
Service or less is required as a condition of eligibility, then the computation
period after the initial computation period shall shift to the current Plan Year
which includes the anniversary of the date on which the Employee first performed
an Hour of Service, and subsequent computation periods shall be the Plan Year.
If there is a shift to the Plan Year, an Employee who is credited with the
number of Hours of Service to be credited with a Year of Service in both the
initial eligibility computation period and the first Plan Year which commences
prior to the first anniversary of the Employee's initial eligibility computation
period will be credited with two (2) Years of Service for purposes of
eligibility to participate.
If two (2) Years of Service are required as a condition of
eligibility, a Participant will only have completed two (2) Years of Service for
eligibility purposes upon completing two (2) consecutive Years of Service
without an intervening 1Year Break-in-Service.
For vesting purposes, and all other purposes not specifically
addressed in this Section, the computation period shall be the period elected in
the Adoption Agreement. If no election is made in the Adoption Agreement, the
computation period shall be the Plan Year.
In determining Years of Service for purposes of vesting under the
Plan, Years of Service will be excluded as elected in the Adoption Agreement and
as specified in Section 3.5.
Years of Service and I-Year Breaks in Service for eligibility
purposes will be measured on the same eligibility computation period. Years of
Service and I-Year Breaks in Service for vesting purposes will be measured on
the same vesting computation period.
Years of Service with any Affiliated Employer shall be recognized.
Furthermore, Years of Service with any predecessor employer that maintained this
19
Plan shall be recognized. Years of Service with any other predecessor employer
shall be recognized as elected in the Adoption Agreement.
In the event the method of crediting service is amended from the
Elapsed Time Method to the Hour of Service Method, an Employee will receive
credit for Years of Service equal to:
(a) The number of Years of Service equal to the number of I-year
Periods of Service credited to the Employee as of the date of the
amendment; and
(b) In the computation period which includes the date of the
amendment, a number of Hours of Service (using the Hours of Service
equivalency method elected in the Adoption Agreement) to any
fractional part of a year credited to the Employee under this Section
as of the date of the amendment.
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered
to appoint and remove the Trustee and the Administrator from time to
time as it deems necessary for the proper administration of the Plan
to ensure that the Plan is being operated for the exclusive benefit of
the Participants and their Beneficiaries in accordance with the terms
of the Plan, the Code, and the Act. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary agent) and
other persons as the Employer deems necessary or desirable in
connection with the exercise of its fiduciary duties under this Plan.
The Employer may compensate such agents or advisers from the assets of
the Plan as fiduciary expenses (but not including any business
(settler) expenses of the Employer), to the extent not paid by the
Employer.
(b) The Employer shall establish a "funding policy and method,"
i.e., it shall determine whether the Plan has a short run need for
liquidity (e.g., to pay benefits) or whether liquidity is a long run
goal and investment growth (and stability of same) is a more current
need, or shall appoint a qualified person to do so. If the Trustee has
discretionary authority, the Employer or its delegate shall
communicate such needs and goals to the Trustee, who shall coordinate
such Plan needs with its investment policy. The communication of such
a "funding policy and method" shall not, however, constitute a
directive to the Trustee as to the investment of the Trust Funds. Such
"funding policy and method" shall be consistent with the objectives of
this Plan and with the requirements of Title I of the Act.
(c) The Employer may appoint, at its option, an Investment
Manager, investment adviser, or other agent to provide direction to
the Trustee with respect to any or all of the Plan assets. Such
appointment shall be given by the Employer in writing in a form
acceptable to the Trustee and shall specifically identify the Plan
assets with respect to which the Investment Manager or other agent
shall have the authority to direct the investment.
20
(d) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct
and evaluation, or through other appropriate ways.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer may appoint one or more Administrators. If the Employer
does not appoint an Administrator, the Employer will be the Administrator. Any
person, including, but not limited to, the Employees of the Employer, shall be
eligible to serve as an Administrator. Any person so appointed shall signify
acceptance by filing written acceptance with the Employer. An Administrator may
resign by delivering a written resignation to the Employer or be removed by the
Employer by delivery of written notice of removal, to take effect at a date
specified therein, or upon delivery to the Administrator if no date is
specified. Upon the resignation or removal of an Administrator, the Employer may
designate in writing a successor to this position.
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the Administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation of
such designation.
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the
Plan for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall administer
the Plan in accordance with its terms and shall have the power and discretion to
construe the terms of the Plan and determine all questions arising in connection
with the administration, interpretation, and application of the Plan. Benefits
under this Plan will be paid only if the Administrator decides in its discretion
that the applicant is entitled to them. Any such determination by the
Administrator shall be conclusive and binding upon all persons. The
Administrator may establish procedures, correct any defect, supply any
information, or reconcile any inconsistency in such manner and to such extent as
shall be deemed necessary or advisable to carry out the purpose of the Plan;
provided, however, that any procedure, discretionary act, interpretation or
construction shall be done in a nondiscriminatory manner based upon uniform
principles consistently applied and shall be consistent with the intent that the
Plan continue to be deemed a qualified plan under the terms of Code Section
401(a), and shall comply with the terms of the Act and all regulations issued
pursuant thereto. The Administrator shall have all powers necessary or
appropriate to accomplish its duties under this Plan.
21
The Administrator shall be charged with the duties of the general
administration of the Plan and the powers necessary to carry out such duties as
set forth under the terms of the Plan, including, but not limited to, the
following:
(a) the discretion to determine all questions relating to the
eligibility of an Employee to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) the authority to review and settle all claims against the
Plan, including claims where the settlement amount cannot be
calculated or is not calculated in accordance with the Plan's benefit
formula. This authority specifically permits the Administrator to
settle, in compromise fashion, disputed claims for benefits and any
other disputed claims made against the Plan;
(c) to compute, certify, and direct the Trustee with respect to
the amount and the kind of benefits to which any Participant shall be
entitled hereunder;
(d) to authorize and direct the Trustee with respect to all
discretionary or otherwise directed disbursements from the Trust Fund;
(e) to maintain all necessary records for the administration of
the Plan;
(f) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan that are consistent with
the terms hereof,
(g) to determine the size and type of any Contract to be
purchased from any Insurer, and to designate the Insurer from which
such Contract shall be purchased;
(h) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be
contributed to the Plan;
(i) to consult with the Employer and the Trustee regarding the
short and long-term liquidity needs of the Plan in order that the
Trustee can exercise any investment discretion (if the Trustee has
such discretion), in a manner designed to accomplish specific
objectives;
(j) to prepare and implement a procedure for notifying
Participants and Beneficiaries of their rights to elect Joint and
Survivor Annuities and Pre-Retirement Survivor Annuities if required
by the Plan, Code and Regulations thereunder;
(k) to assist Participants regarding their rights, benefits, or
elections available under the Plan;
(l) to act as the named Fiduciary responsible for communicating
with Participants as needed to maintain Plan compliance with Act
Section 404(c) (if the Employer intends to comply with Act Section
404(c)) including, but not limited to, the receipt and transmission of
Participants' directions as to the investment of their accounts under
the Plan and the formation of policies, rules, and procedures pursuant
to which Participants may give investment instructions with respect to
22
the investment of their accounts; and
(m) to determine the validity of, and take appropriate action
with respect to, any qualified domestic relations order received by
it.
2.5 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall
keep all other books of account, records, and other data that may be necessary
for proper administration of the Plan and shall be responsible for supplying all
information and reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.6 APPOINTMENT OF ADVISERS
The Administrator may appoint counsel, specialists, advisers, agents
(including nonfiduciary agents) and other persons as the Administrator deems
necessary or desirable in connection with the administration of this Plan,
including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other duties as the Administrator may appoint, assistance with maintaining Plan
records and the providing of investment information to the Plan's investment
fiduciaries and, if applicable, to Plan Participants.
2.7 INFORMATION FROM EMPLOYER
The Employer shall supply full and timely information to the
Administrator on all pertinent facts as the Administrator may require in order
to perform its functions hereunder and the Administrator shall advise the
Trustee of such of the foregoing facts as may be pertinent to the Trustee's
duties under the Plan. The Administrator may rely upon such information as is
supplied by the Employer and shall have no duty or responsibility to verify such
information.
2.8 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any expenses incident
to the functioning of the Administrator, or any person or persons retained or
appointed by any Named Fiduciary incident to the exercise of their duties under
the Plan, including, but not limited to, fees of accountants, counsel,
Investment Managers, agents (including nonfiduciary agents) appointed for the
purpose of assisting the Administrator or Trustee in carrying out the
instructions of Participants as to the directed investment of their accounts (if
permitted) and other specialists and their agents, the costs of any bonds
required pursuant to Act Section 412, and other costs of administering the Plan.
Until paid, the expenses shall constitute a liability of the Trust Fund.
2.9 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.3, if there is more than one
Administrator, then they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
23
2.10 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within ninety (90) days after the application is filed, or such
period as is required by applicable law or Department of Labor regulation. In
the event the claim is denied, the reasons for the denial shall be specifically
set forth in the notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan shall be cited, and, where appropriate, an
explanation as to how the claimant can perfect the claim will be provided. In
addition, the claimant shall be furnished with an explanation of the Plan's
claims review procedure.
2.11 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has
been denied a benefit by a decision of the Administrator pursuant to Section 2.
10 shall be entitled to request the Administrator to give further consideration
to the claim by filing with the Administrator a written request for a hearing.
Such request, together with a written statement of the reasons why the claimant
believes such claim should be allowed, shall be filed with the Administrator no
later than sixty (60) days after receipt of the written notification provided
for in Section 2.10. The Administrator shall then conduct a hearing within the
next sixty (60) days, at which the claimant may be represented by an attorney or
any other representative of such claimant's choosing and expense and at which
the claimant shall have an opportunity to submit written and oral evidence and
arguments in support of the claim. At the hearing (or prior thereto upon five
(5) business days written notice to the Administrator) the claimant or the
claimant's representative shall have an opportunity to review all documents in
the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within sixty (60) days of receipt of the appeal
(unless there has been an extension of sixty (60) days due to special
circumstances, provided the delay and the special circumstances occasioning it
are communicated to the claimant within the sixty (60) day period). Such
communication shall be written in a manner calculated to be understood by the
claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.
Notwithstanding the preceding, to the extent any of the time periods specified
in this Section are amended by law or Department of Labor regulation, then the
time frames specified herein shall automatically be changed in accordance with
such law or regulation.
If the Administrator, pursuant to the claims review procedure, makes
a final written determination denying a Participant's or Beneficiary's benefit
claim, then in order to preserve the claim, the Participant or Beneficiary must
file an action with respect to the denied claim not later than one hundred
eighty (180) days following the date of the Administrator's final determination.
24
ARTICLE III
ARTICLE III ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate hereunder on
the date such Employee has satisfied the conditions of eligibility elected in
the Adoption Agreement.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee who has satisfied the conditions of eligibility
pursuant to Section 3.1 shall become a Participant effective as of the date
elected in the Adoption Agreement. If said Employee is not employed on such
date, but is reemployed before a 1-Year Break in Service has occurred, then such
Employee shall become a Participant on the date of reemployment or, if later,
the date that the Employee would have otherwise entered the Plan had the
Employee not terminated employment.
Unless specifically provided otherwise in the Adoption Agreement, an
Eligible Employee who satisfies the Plan's eligibility requirement conditions by
reason of recognition of service with a predecessor employer will become a
Participant as of the day the Plan credits service with a predecessor employer
or, if later, the date the Employee would have otherwise entered the Plan had
the service with the predecessor employer been service with the Employer.
If an Employee, who has satisfied the Plan's eligibility
requirements and would otherwise have become a Participant, shall go from a
classification of a noneligible Employee to an Eligible Employee, such Employee
shall become a Participant on the date such Employee becomes an Eligible
Employee or, if later, the date that the Employee would have otherwise entered
the Plan had the Employee always been an Eligible Employee.
If an Employee, who has satisfied the Plan's eligibility
requirements and would otherwise become a Participant, shall go from a
classification of an Eligible Employee to a noneligible class of Employees, such
Employee shall become a Participant in the Plan on the date such Employee again
becomes an Eligible Employee, or, if later, the date that the 3.5
Employee would have otherwise entered the Plan had the Employee
always been an Eligible Employee. However, if such Employee incurs a 1-Year
Break in Service, eligibility will be determined under the Break in Service
rules set forth in Section 3.5.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee
for participation in the Plan based upon information furnished by the Employer.
Such determination shall be conclusive and binding upon all persons, as long as
the same is made pursuant to the Plan and the Act. Such determination shall be
subject to review pursuant to Section 2.11.
25
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of an
Eligible Employee to an ineligible Employee, such Former Participant shall
continue to vest in the Plan for each Year of Service (or Period of Service, if
the Elapsed Time Method is used) completed while an ineligible Employee, until
such time as the Participant's Account is forfeited or distributed pursuant to
the terms of the Plan. Additionally, the Former Participant's interest in the
Plan shall continue to share in the earnings of the Trust Fund in the same
manner as Participants.
3.5 REHIRED EMPLOYEES AND BREAKS IN SERVICE
(a) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed by the
Employer before a I-Year Break in Service occurs, the Former
Participant shall become a Participant as of the reemployment date.
(b) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed after a
1-Year Break in Service has occurred, Years of Service (or Periods of
Service if the Elapsed Time Method is being used) shall include Years
of Service (or Periods of Service if the Elapsed Time Method is being
used) prior to the 1-Year Break in Service subject to the following
rules:
(1) In the case of a Former Participant who under the Plan does
not have a nonforfeitable right to any interest in the Plan
resulting from Employer contributions, Years of Service (or
Periods of Service) before a period of 1-Year Breaks in Service
will not be taken into account if the number of consecutive
1-Year Breaks in Service equals or exceeds the greater of (A)
five (5) or (B) the aggregate number of pre-break Years of
Service (or Periods of Service). Such aggregate number of Years
of Service (or Periods of Service) will not include any Years of
Service (or Periods of Service) disregarded under the preceding
sentence by reason of prior 1-Year Breaks in Service;
(2) A Former Participant who has not had Years of Service (or
Periods of Service) before a 1-Year Break in Service disregarded
pursuant to (1) above, shall participate in the Plan as of the
date of reemployment, or if later, as of the date the Former
Participant would otherwise enter the Plan pursuant to Sections
3.1 and 3.2 taking into account all service not disregarded.
(c) After a Former Participant who has severed employment with
the Employer incurs five (5) consecutive I-Year Breaks in Service, the
Vested portion of such Former Participant's Account attributable to
pre-break service shall not be increased as a result of post-break
service. In such case, separate accounts will be maintained as
follows:
(1) one account for nonforfeitable benefits attributable to
pre-break service; and
26
(2) one account representing the Participant's Employer-derived
account balance in the Plan attributable to post-break service.
(d) If any Participant becomes a Former Participant due to
severance of employment with the Employer and is reemployed by the
Employer before five (5) consecutive 1-Year Breaks in Service, and
such Former Participant had received a distribution of the entire
Vested interest prior to reemployment, then the forfeited account
shall be reinstated only if the Former Participant repays the full
amount which had been distributed. Such repayment must be made before
the earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer or the close of
the first period of five (5) consecutive I-Year Breaks in Service
commencing after the distribution. If a distribution occurs for any
reason other than a severance of employment, the time for repayment
may not end earlier than five (5) years after the date of
distribution. In the event the Former Participant does repay the full
amount distributed, the undistributed forfeited portion of the
Participant's Account must be restored in full, unadjusted by any
gains or losses occurring subsequent to the Valuation Date preceding
the distribution. The source for such reinstatement may be Forfeitures
occurring during the Plan Year. If such source is insufficient, then
the Employer will contribute an amount which is sufficient to restore
the Participant's Account, provided, however, that if a discretionary
contribution is made for such year, such contribution will first be
applied to restore any such accounts and the remainder shall be
allocated in accordance with the terms of the Plan. If a non-Vested
Former Participant was deemed to have received a distribution and such
Former Participant is reemployed by the Employer before five (5)
consecutive 1-Year Breaks in Service, then such Participant will be
deemed to have repaid the deemed distribution as of the date of
reemployment.
3.6 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be irrevocable and communicated to the Employer, in writing, within a reasonable
period of time before the beginning of the first Plan Year. For standardized
Plans, a Participant or an Eligible Employee may not elect not to participate.
3.7 CONTROL OF ENTITIES BY OWNER-EMPLOYEE
Effective with respect to Plan Years beginning after December 31,
1996, if this Plan provides contributions or benefits for one or more
Owner-Employees, the contributions on behalf of any Owner-Employee shall be made
only with respect to the Earned Income for such Owner-Employee which is derived
from the trade or business with respect to which such Plan is established.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For a Money Purchase Plan:
27
(1) The Employer will make contributions on the following basis.
On behalf of each Participant eligible to share in allocations,
for each year of such Participant's participation in this Plan,
the Employer will contribute the amount elected in the Adoption
Agreement. All contributions by the Employer will be made in
cash. In the event a funding waiver is obtained, this Plan shall
be deemed to be an individually designed plan.
(2) Notwithstanding the foregoing, with respect to an Employer
which is not a tax-exempt entity, the Employer's contribution for
any Fiscal Year shall not exceed the maximum amount allowable as
a deduction to the Employer under the provisions of Code Section
404. However, to the extent necessary to provide the top heavy
minimum allocations, the Employer shall make a contribution even
if it exceeds the amount that is deductible under Code Section
404.
(b) For a Profit Sharing Plan:
(1) For each Plan Year, the Employer may (or will in the case of
a Prevailing Wage contribution) contribute to the Plan such
amount as elected by the Employer in the Adoption Agreement.
(2) Additionally, the Employer will contribute to the Plan the
amount necessary, if any, to provide the top heavy minimum
allocations, even if it exceeds current or accumulated Net Profit
or the amount that is deductible under Code Section 404.
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
Unless otherwise provided by contract or law, the Employer may make
its contribution to the Plan for a particular Plan Year at such time as the
Employer, in its sole discretion, determines. If the Employer makes a
contribution for a particular Plan Year after the close of that Plan Year, the
Employer will designate to the Administrator the Plan Year for which the
Employer is making its contribution.
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in
the name of each Participant to which the Administrator shall credit
as of each Anniversary Date, or other Valuation Date, all amounts
allocated to each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of the Employer's contribution, if any, for each Plan Year. Within a
reasonable period of time after the date of receipt by the
Administrator of such information, the Administrator shall allocate
any contributions as follows:
(1) For a Money Purchase Plan (other than a Money Purchase Plan
which is integrated by allocation):
28
(i) The Employer's contribution shall be allocated to each
Participant's Account in the manner set forth in Section 4.1
herein and as specified in the Adoption Agreement.
(ii) However, regardless of the preceding, a Participant
shall only be eligible to share in the allocations of the
Employer's contribution for the year if the conditions set
forth in the Adoption Agreement are satisfied, unless a top
heavy contribution is required pursuant to Section 4.3(f).
If no election is made in the Adoption Agreement, then a
Participant shall be eligible to share in the allocation of
the Employer's contribution for the year if the Participant
completes more than five hundred (500) Hours of Service (or
three (3) Months of Service if the Elapsed Time method is
chosen in the Adoption Agreement) during the Plan Year or
who is employed on the last day of the Plan Year.
Furthermore, with respect to a non-standardized Adoption
Agreement, regardless of any election in the Adoption
Agreement to the contrary, for the Plan Year in which this
Plan terminates, a Participant shall only be eligible to
share in the allocation of the Employer's contributions for
the Plan Year if the Participant is employed at the end of
the Plan Year and has completed a Year of Service (or Period
of Service if the Elapsed Time Method is elected).
(2) For an integrated Profit Sharing Plan allocation or a Money
Purchase Plan which is integrated by allocation:
(i) Except as provided in Section 4.3(f) for top heavy
purposes and subject to the "Overall Permitted Disparity
Limits," the Employer's contribution shall be allocated to
each Participant's Account in a dollar amount equal to 5.7%
of the sum of each Participant's Compensation plus Excess
Compensation. If the Employer does not contribute such
amount for all Participants, each Participant will be
allocated a share of the contribution in the same proportion
that each such Participant's Compensation plus Excess
Compensation for the Plan Year bears to the total
Compensation plus the total Excess Compensation of all
Participants for that year. However, in the case of any
Participant who has exceeded the "Cumulative Permitted
Disparity Limit," the allocation set forth in this paragraph
shall be based on such Participant's Compensation rather
than Compensation plus Excess Compensation.
Regardless of the preceding, 4.3% shall be substituted for
5.7% above if Excess Compensation is based on more than 20%
and less than or equal to 80% of the Taxable Wage Base. If
Excess Compensation is based on less than 100% and more than
80% of the Taxable Wage Base, then 5.4% shall be substituted
for 5.7% above.
(ii) The balance of the Employer's contribution over the
amount allocated above, if any, shall be allocated to each
Participant's Account in the same proportion that each such
29
Participant's Compensation for the Year bears to the total
Compensation of all Participants for such year.
(iii) However, regardless of the preceding, a Participant
shall only be eligible to share in the allocations of the
Employer's Contribution for the year if the conditions set
forth in the Adoption Agreement are satisfied, unless a
contribution is required pursuant to Section 4.3(f). If no
election is made in the Adoption Agreement, then a
Participant shall be eligible to share in the allocation of
the Employer's contribution for the year if the Participant
completes more than five hundred (500) Hours of Service (or
three (3) Months of Service if the Elapsed Time method is
chosen in the Adoption Agreement) during the Plan Year or
who is employed on the last day of the Plan Year.
Furthermore, with respect to a non-standardized Adoption
Agreement, regardless of any election in the Adoption
Agreement to the contrary, for the Plan Year in which this
Plan terminates, a Participant shall only be eligible to
share in the allocation of the Employer's contributions for
the Plan Year if the Participant is employed at the end of
the Plan Year and has completed a Year of Service (or Period
of Service if the Elapsed Time Method is elected).
(3) For a Profit Sharing Plan with a non-integrated allocation
formula or a Prevailing Wage contribution:
(i) The Employer's contribution shall be allocated to each
Participant's Account in accordance with the allocation
method elected in the Adoption Agreement.
(ii) However, regardless of the preceding, a Participant
shall only be eligible to share in the allocations of the
Employer's contribution for the year if the conditions set
forth in the Adoption Agreement are satisfied, unless a top
heavy contribution is required pursuant to Section 4.3(f).
If no election is made in the Adoption Agreement, then a
Participant shall be eligible to share in the allocation of
the Employer's contribution for the year if the Participant
completes more than five hundred (500) Hours of Service (or
three (3) Months of Service if the Elapsed Time method is
chosen in the Adoption Agreement) during the Plan Year or
who is employed on the last day of the Plan Year.
Furthermore, with respect to a non-standardized Adoption
Agreement, regardless of any election in the Adoption
Agreement to the contrary, for the Plan Year in which this
Plan terminates, a Participant shall only be eligible to
share in the allocation of the Employer's contributions for
the Plan Year if the Participant is employed at the end of
the Plan Year and has completed a Year of Service (or Period
of Service if the Elapsed Time Method is elected).
(4) "Overall Permitted Disparity Limits":
30
"Annual Overall Permitted Disparity Limit": Notwithstanding the
preceding paragraphs, if in any Plan Year this Plan "benefits"
any Participant who "benefits" under another qualified plan or
simplified employee pension, as defined in Code Section 408(k),
maintained by the Employer that either provides for or imputes
permitted disparity (integrates), then such plans will be
considered to be one plan and will be considered to comply with
the permitted disparity rules if the extent of the permitted
disparity of all such plans does not exceed 100%. For purposes of
the preceding sentence, the extent of the permitted disparity of
a plan is the ratio, expressed as a percentage, which the actual
benefits, benefit rate, offset rate, or employer contribution
rate, whatever is applicable under the Plan, bears to the
limitation under Code Section 401(1) applicable to such Plan.
Notwithstanding the foregoing, if the Employer maintains two or
more standardized paired plans, only one plan may provide for
permitted disparity.
"Cumulative Permitted Disparity Limit": With respect to a
Participant who "benefits" or "has benefited" under a defined
benefit or target benefit plan of the Employer, effective for
Plan Years beginning on or after January 1, 1994, the cumulative
permitted disparity limit for the Participant is thirty five (35)
total cumulative permitted disparity years. Total cumulative
permitted disparity years means the number of years credited to
the Participant for allocation or accrual purposes under the
Plan, any other qualified plan or simplified employee pension
plan (whether or not terminated) ever maintained by the Employer,
while such plan either provides for or imputes permitted
disparity. For purposes of determining the Participant's
cumulative permitted disparity limit, all years ending in the
same calendar year are treated as the same year. If the
Participant has not "benefited" under a defined benefit or target
benefit plan which neither provides for nor imputes permitted
disparity for any year beginning on or after January 1, 1994,
then such Participant has no cumulative disparity limit.
For purposes of this Section, "benefiting" means benefiting under
the Plan for any Plan Year during which a Participant received or
is deemed to receive an allocation in accordance with Regulation
1.410(b)-3(a).
(c) Except as otherwise elected in the Adoption Agreement or as
provided in Section 4. 10 with respect to Participant Directed
Accounts, as of each Valuation Date, before allocation of any Employer
contributions and Forfeitures, any earnings or losses (net
appreciation or net depreciation) of the Trust Fund (exclusive of
assets segregated for distribution) shall be allocated in the same
proportion that each Participant's and Former Participant's
nonsegregated accounts bear to the total of all Participants' and
Former Participants' nonsegregated accounts as of such date. If any
nonsegregated account of a Participant has been distributed prior to
the Valuation Date subsequent to a Participant's termination of
employment, no earnings or losses shall be credited to such account.
31
(d) Participants' Accounts shall be debited for any insurance or
annuity premiums paid, if any, and credited with any dividends or
interest received on Contracts.
(e) On or before each Anniversary Date, any amounts which became
Forfeitures since the last Anniversary Date may be made available to
reinstate previously forfeited account balances of Former
Participants, if any, in accordance with Section 3.5(d) or used to
satisfy any contribution that may be required pursuant to Section 6.9.
The remaining Forfeitures, if any, shall be treated in accordance with
the Adoption Agreement. If no election is made in the Adoption
Agreement, any remaining Forfeitures will be used to reduce any future
Employer contributions under the Plan. However, if the Plan provides
for an integrated allocation, then any remaining Forfeitures will be
added to the Employer's contributions under the Plan. Regardless of
the preceding sentences, in the event the allocation of Forfeitures
provided herein shall cause the "Annual Additions" (as defined in
Section 4.4) to any Participant's Account to exceed the amount
allowable by the Code, an adjustment shall be made in accordance with
Section 4.5. Except, however, a Participant shall only be eligible to
share in the allocations of Forfeitures for the year if the conditions
set forth in the Adoption Agreement are satisfied, unless a top heavy
contribution is required pursuant to Section 4.3(f). If no election is
made in the Adoption Agreement, then a Participant shall be eligible
to share in the allocation of the Employer's contribution for the year
if the Participant completes more than five hundred (500) Hours of
Service (or three (3) Months of Service if the Elapsed Time method is
chosen in the Adoption Agreement) during the Plan Year or who is
employed on the last day of the Plan Year.
(f) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of
the Employer's contributions and Forfeitures allocated to the
Participant's Combined Account of each Non-Key Employee shall be equal
to at least three percent (3%) of such Non-Key Employee's 415
Compensation (reduced by contributions and forfeitures, if any,
allocated to each Non-Key Employee in any defined contribution plan
included with this Plan in a "required aggregation group" (as defined
in Section 9.2(f)). However, if (i) the sum of the Employer's
contributions and Forfeitures allocated to the Participant's Combined
Account of each Key Employee for such Top Heavy Plan Year is less than
three percent (3%) of each Key Employee's 415 Compensation and (ii)
this Plan is not required to be included in a "required aggregation
group" (as defined in Section 9.2(f)) to enable a defined benefit plan
to meet the requirements of Code Section 401(a)(4) or 410, the sum of
the Employer's contributions and Forfeitures allocated to the
Participant's Combined Account of each Non-Key Employee shall be equal
to the largest percentage allocated to the Participant's Combined
Account of any Key Employee.
However, for each Non-Key Employee who is a Participant in a paired
Profit Sharing Plan or 401(k) Profit Sharing Plan and a paired Money Purchase
Plan, the minimum three percent (3%) allocation specified above shall be
provided in the Money Purchase Plan.
If this is an integrated Plan, then for any Top Heavy Plan Year the
Employer's contribution shall be allocated as follows and shall still be
required to satisfy the other provisions of this subsection:
32
(1) An amount equal to three percent (3%) multiplied by each
Participant's Compensation for the Plan Year shall be allocated
to each Participant's Account. If the Employer does not
contribute such amount for all Participants, the amount shall be
allocated to each Participant's Account in the same proportion
that such Participant's total Compensation for the Plan Year
bears to the total Compensation of all Participants for such
year.
(2) The balance of the Employer's contribution over the amount
allocated under subparagraph (1) hereof shall be allocated to
each Participant's Account in a dollar amount equal to three
percent (3%) multiplied by a Participant's Excess Compensation.
If the Employer does not contribute such amount for all
Participants, each Participant will be allocated a share of the
contribution in the same proportion that such Participant's
Excess Compensation bears to the total Excess Compensation of all
Participants for that year. For purposes of this paragraph, in
the case of any Participant who has exceeded the cumulative
permitted disparity limit described in Section 4.3(b)(4), such
Participant's total Compensation will be taken into account.
(3) The balance of the Employer's contribution over the amount
allocated under subparagraph (2) hereof shall be allocated to
each Participant's Account in a dollar amount equal to 2.7%
multiplied by the sum of each Participant's total Compensation
plus Excess Compensation. If the Employer does not contribute
such amount for all Participants, each Participant will be
allocated a share of the contribution in the same proportion that
such Participant's total Compensation plus Excess Compensation
for the Plan Year bears to the total Compensation plus Excess
Compensation of all Participants for that year. For purposes of
this paragraph, in the case of any Participant who has exceeded
the cumulative permitted disparity limit described in Section
4.3(b)(4), such Participant's total Compensation rather than
Compensation plus Excess Compensation will be taken into account.
Regardless of the preceding, 1.3% shall be substituted for 2.7%
above if Excess Compensation is based on more than 20% and less
than or equal to 80% of the Taxable Wage Base. If Excess
Compensation is based on less than 100% and more than 80% of the
Taxable Wage Base, then 2.4% shall be substituted for 2.7% above.
(4) The balance of the Employer's contributions over the amount
allocated above, if any, shall be allocated to each Participant's
Account in the same proportion that such Participant's total
Compensation for the Plan Year bears to the total Compensation of
all Participants for such year.
For each Non-Key Employee who is a Participant in this Plan and
another non-paired defined contribution plan maintained by the Employer, the
minimum three percent (3%) allocation specified above shall be provided as
specified in the Adoption Agreement.
33
(g) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Employer's
contributions and Forfeitures allocated on behalf of such Key Employee
divided by the 415 Compensation for such Key Employee.
(h) For any Top Heavy Plan Year, the minimum allocations set
forth in this Section shall be allocated to the Participant's Combined
Account of all Non-Key Employees who are Participants and who are
employed by the Employer on the last day of the Plan Year, including
Non-Key Employees who have (1) failed to complete a Year of Service;
or (2) declined to make mandatory contributions (if required) or, in
the case of a cash or deferred arrangement, Elective Deferrals to the
Plan.
(i) Notwithstanding anything herein to the contrary, in any Plan
Year in which the Employer maintains both this Plan and a defined
benefit pension plan included in a "required aggregation group" (as
defined in Section 9.2(t)) which is top heavy, the Employer will not
be required (unless otherwise elected in the Adoption Agreement) to
provide a Non-Key Employee with both the full separate minimum defined
benefit plan benefit and the full separate defined contribution plan
allocations. In such case, the top heavy minimum benefits will be
provided as elected in the Adoption Agreement and, if applicable, as
follows:
(1) If the 5% defined contribution minimum is elected in the
Adoption Agreement:
(i) The requirements of Section 9.1 will apply except that
each Non-Key Employee who is a Participant in the Profit
Sharing Plan or Money Purchase Plan and who is also a
Participant in the Defined Benefit Plan will receive a
minimum allocation of five percent (5%) of such
Participant's 415 Compensation from the applicable defined
contribution plan(s).
(ii) For each Non-Key Employee who is a Participant only in
the Defined Benefit Plan the Employer will provide a minimum
non-integrated benefit equal to two percent (2%) of such
Participant's highest five (5) consecutive year average 415
Compensation for each Year of Service while a participant in
the plan, in which the Plan is top heavy, not to exceed ten
(10).
(iii) For each Non-Key Employee who is a Participant only in
this defined contribution plan, the Employer will provide a
minimum allocation equal to three percent (3%) of such
Participant's 415 Compensation.
(2) If the 2% defined benefit minimum is elected in the Adoption
Agreement, then for each Non-Key Employee who is a Participant
only in the defined benefit plan, the Employer will provide a
minimum non-integrated benefit equal to two percent (2%) of such
Participant's highest five (5) consecutive year average of 415
34
Compensation for each Year of Service while a participant in the
plan, in which the Plan is top heavy, not to exceed ten (10).
(j) For the purposes of this Section, 415 Compensation will be
limited to the same dollar limitations set forth in Section 1.11
adjusted in such manner as permitted under Code Section 415(d).
(k) Notwithstanding anything in this Section to the contrary, all
information necessary to properly reflect a given transaction may not
be available until after the date specified herein for processing such
transaction, in which case the transaction will be reflected when such
information is received and processed. Subject to express limits that
may be imposed under the Code, the processing of any contribution,
distribution or other transaction may be delayed for any legitimate
business reason (including, but not limited to, failure of systems or
computer programs, failure of the means of the transmission of data,
force majeure, the failure of a service provider to timely receive
values or prices, and correction for errors or omissions or the errors
or omissions of any service provider). The processing date of a
transaction will be binding for all purposes of the Plan.
(l) Notwithstanding anything in this Section to the contrary, the
provisions of this subsection apply for any Plan Year if, in the
non-standardized Adoption Agreement, the Employer elected to apply the
410(b) ratio percentage failsafe provisions and the Plan fails to
satisfy the "ratio percentage test" due to a last day of the Plan Year
allocation condition or an Hours of Service (or months of service)
allocation condition. A plan satisfies the "ratio percentage test" if,
on the last day of the Plan Year, the "benefiting ratio" of the
Non-Highly Compensated Employees who are "includible" is at least 70%
of the "benefiting ratio" of the Highly Compensated Employees who are
"includible." The "benefiting ratio" of the Non-Highly Compensated
Employees is the number of "includible" Non Highly Compensated
Employees "benefiting" under the Plan divided by the number of
"includible" Employees who are Non-Highly Compensated Employees. The
"benefiting ratio" of the Highly Compensated Employees is the number
of Highly Compensated Employees "benefiting" under the Plan divided by
the number of "includible" Highly Compensated Employees. "Includible"
Employees are all Employees other than: (1) those Employees excluded
from participating in the plan for the entire Plan Year by reason of
the collective bargaining unit exclusion or the nonresident alien
exclusion described in the Code or by reason of the age and service
requirements of Article III; and (2) any Employee who incurs a
separation from service during the Plan Year and fails to complete at
least 501 Hours of Service (or three (3) months of service if the
Elapsed Time Method is being used) during such Plan Year.
For purposes of this subsection, an Employee is "benefiting" under
the Plan on a particular date if, under the Plan, the Employee is entitled to an
Employer contribution or an allocation of Forfeitures for the Plan Year.
If this subsection applies, then the Administrator will suspend the
allocation conditions for the "includible" Non-Highly Compensated Employees who
are Participants, beginning first with the "includible" Employees employed by
the Employer on the last day of the Plan Year, then the "includible" Employees
who have the latest separation from service during the Plan Year, and continuing
35
to suspend the allocation conditions for each "includible" Employee who incurred
an earlier separation from service, from the latest to the earliest separation
from service date, until the Plan satisfies the "ratio percentage test" for the
Plan Year. If two or more "includible" Employees have a separation from service
on the same day, then the Administrator will suspend the allocation conditions
for all such "includible" Employees, irrespective of whether the Plan can
satisfy the "ratio percentage test" by accruing benefits for fewer than all such
"includible" Employees. If the Plan for any Plan Year suspends the allocation
conditions for an "includible" Employee, then that Employee will share in the
allocation for that Plan Year of the Employer contribution and Forfeitures, if
any, without regard to whether the Employee has satisfied the other allocation
conditions set forth in this Section.
4.4 MAXIMUM ANNUAL ADDITIONS
(a)(1) If a Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer, or
a welfare benefit fund (as defined in Code Section 419(e)) maintained
by the Employer, or an individual medical account (as defined in Code
Section 415(1)(2)) maintained by the Employer, or a simplified
employee pension (as defined in Code Section 408(k)) maintained by the
Employer which provides "Annual Additions," the amount of "Annual
Additions" which may be credited to the Participant's accounts for any
Limitation Year shall not exceed the lesser of the "Maximum
Permissible Amount" or any other limitation contained in this Plan. If
the Employer contribution that would otherwise be contributed or
allocated to the Participant's accounts would cause the "Annual
Additions" for the Limitation Year to exceed the "Maximum Permissible
Amount," the amount contributed or allocated will be reduced so that
the "Annual Additions" for the Limitation Year will equal the "Maximum
Permissible Amount," and any amount in excess of the "Maximum
Permissible Amount" which would have been allocated to such
Participant may be allocated to other Participants.
(2) Prior to determining the Participant's actual 415
Compensation for the Limitation Year, the Employer may determine
the "Maximum Permissible Amount" for a Participant on the basis
of a reasonable estimation of the Participant's 415 Compensation
for the Limitation Year, uniformly determined for all
Participants similarly situated.
(3) As soon as is administratively feasible after the end of the
Limitation Year the "Maximum Permissible Amount" for such
Limitation Year shall be determined on the basis of the
Participant's actual 415 Compensation for such Limitation Year.
(b)(1) This subsection applies if, in addition to this Plan, a
Participant is covered under another qualified defined contribution
plan maintained by the Employer that is a "Master or Prototype Plan,"
a welfare benefit fund (as defined in Code Section 419(e)) maintained
by the Employer, an individual medical account (as defined in Code
Section 415(l)(2)) maintained by the Employer, or a simplified
employee pension (as defined in Code Section 408(k)) maintained by the
Employer, which provides "Annual Additions," during any Limitation
Year. The "Annual Additions" which may be credited to a Participant's
36
accounts under this Plan for any such Limitation Year shall not exceed
the "Maximum Permissible Amount" reduced by the "Annual Additions"
credited to a Participant's accounts under the other plans and welfare
benefit funds, individual medical accounts, and simplified employee
pensions for the same Limitation Year. If the "Annual Additions" with
respect to the Participant under other defined contribution plans and
welfare benefit funds maintained by the Employer are less than the
"Maximum Permissible Amount" and the Employer contribution that would
otherwise be contributed or allocated to the Participant's accounts
under this Plan would cause the "Annual Additions" for the Limitation
Year to exceed this limitation, the amount contributed or allocated
will be reduced so that the "Annual Additions" under all such plans
and welfare benefit funds for the Limitation Year will equal the
"Maximum Permissible Amount," and any amount in excess of the "Maximum
Permissible Amount" which would have been allocated to such
Participant may be allocated to other Participants. If the "Annual
Additions" with respect to the Participant under such other defined
contribution plans, welfare benefit funds, individual medical accounts
and simplified employee pensions in the aggregate are equal to or
greater than the "Maximum Permissible Amount," no amount will be
contributed or allocated to the Participant's account under this Plan
for the Limitation Year.
(2) Prior to determining the Participant's actual 415
Compensation for the Limitation Year, the Employer may determine
the "Maximum Permissible Amount" for a Participant on the basis
of a reasonable estimation of the Participant's 415 Compensation
for the Limitation Year, uniformly determined for all
Participants similarly situated.
(3) As soon as is administratively feasible after the end of the
Limitation Year, the "Maximum Permissible Amount" for the
Limitation Year will be determined on the basis of the
Participant's actual 415 Compensation for the Limitation Year.
(4) If, pursuant to Section 4.4(b)(2) or Section 4.5, a
Participant's "Annual Additions" under this Plan and such other
plans would result in an "Excess Amount" for a Limitation Year,
the "Excess Amount" will be deemed to consist of the "Annual
Additions" last allocated, except that "Annual Additions"
attributable to a simplified employee pension will be deemed to
have been allocated first, followed by "Annual Additions" to a
welfare benefit fund or individual medical account, and then by
"Annual Additions" to a plan subject to Code Section 412,
regardless of the actual allocation date.
(5) If an "Excess Amount" was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation
date of another plan, the "Excess Amount" attributed to this Plan
will be the product of:
(i) the total "Excess Amount" allocated as of such date,
times
(ii) the ratio of (1) the "Annual Additions" allocated to
the Participant for the Limitation Year as of such date
under this Plan to (2) the total "Annual Additions"
37
allocated to the Participant for the Limitation Year as of
such date under this and all the other qualified defined
contribution plans.
(6) Any "Excess Amount" attributed to this Plan will be disposed
of in the manner described in Section 4.5.
(c) If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a "Master or
Prototype Plan," "Annual Additions" which may be credited to the
Participant's Combined Account under this Plan for any Limitation Year
will be limited in accordance with Section 4.4(b), unless the Employer
provides other limitations in the Adoption Agreement.
(d) For any Limitation Year beginning prior to the date the Code
Section 415(e) limits are repealed with respect to this Plan (as
specified in the Adoption Agreement for the GUST transitional rules),
if the Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, then the
sum of the Participant's "Defined Benefit Plan Fraction" and "Defined
Contribution Plan Fraction" may not exceed 1.0. In such event, the
rate of accrual in the defined benefit plan will be reduced to the
extent necessary so that the sum of the "Defined Contribution
Fraction" and "Defined Benefit Fraction" will equal 1.0. However, in
the Adoption Agreement the Employer may specify an alternative method
under which the plans involved will satisfy the limitations of Code
Section 415(e), including increased top heavy minimum benefits so that
the combined limitation is 1.25 rather than 1.0.
(e) For purposes of applying the limitations of Code Section 415,
the transfer of funds from one qualified plan to another is not an
"Annual Addition." In addition, the following are not Employee
contributions for the purposes of Section 4.4(f)(l)(b): (1) rollover
contributions (as defined in Code Sections 402(c), 403(a)(4),
403(b)(8) and 408(d)(3)); (2) repayments of loans made to a
Participant from the Plan; (3) repayments of distributions received by
an Employee pursuant to Code Section 411 (a)(7)(B) (cash-outs); (4)
repayments of distributions received by an Employee pursuant to Code
Section 411(a)(3)(D) (mandatory contributions); and (5) Employee
contributions to a simplified employee pension excludable from gross
income under Code Section 408(k)(6).
(f) For purposes of this Section, the following terms shall be
defined as follows:
(1) "Annual Additions" means the sum credited to a Participant's
accounts for any Limitation Year of (a) Employer contributions,
(b) Employee contributions (except as provided below), (c)
forfeitures, (d) amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Code Section 415(l)(2),
which is part of a pension or annuity plan maintained by the
Employer, (e) amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as defined
in Code Section 419A(d)(3)) under a welfare benefit fund (as
38
defined in Code Section 419(e)) maintained by the Employer and
(f) allocations under a simplified employee pension. Except,
however, the Compensation percentage limitation referred to in
paragraph (f)(9)(ii) shall not apply to: (1) any contribution for
medical benefits (within the meaning of Code Section 419A(f)(2))
after separation from service which is otherwise treated as an
"Annual Addition," or (2) any amount otherwise treated as an
"Annual Addition" under Code Section 415(1)(1). Notwithstanding
the foregoing, for Limitation Years beginning prior to January 1,
1987, only that portion of Employee contributions equal to the
lesser of Employee contributions in excess of six percent (6%) of
415 Compensation or one-half of Employee contributions shall be
considered an "Annual Addition."
For this purpose, any Excess Amount applied under Section
4.5 in the Limitation Year to reduce Employer contributions shall
be considered "Annual Additions" for such Limitation Year.
(2) "Defined Benefit Fraction" means a fraction, the numerator of
which is the sum of the Participant's "Projected Annual Benefits"
under all the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the
lesser of one hundred twenty-five percent (125%) of the dollar
limitation determined for the Limitation Year under Code Sections
415(b)(1)(A) as adjusted by Code Section 415(d) or one hundred
forty percent (140%) of the "Highest Average Compensation"
including any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year
beginning after December 31, 1986, in one or more defined benefit
plans maintained by the Employer which were in existence on May
6, 1986, the denominator of this fraction will not be less than
one hundred twenty-five percent (125%) of the sum of the annual
benefits under such plans which the Participant had accrued as of
the end of the close of the last Limitation Year beginning before
January 1, 1987, disregarding any changes in the terms and
conditions of the plan after May 5, 1986. The preceding sentence
applies only if the defined benefit plans individually and in the
aggregate satisfied the requirements of Code Section 415 for all
Limitation Years beginning before January 1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year,
one hundred percent (100%) shall be substituted for one hundred
twenty-five percent (125%) unless the extra top heavy minimum
allocation or benefit is being made pursuant to the Employer's
specification in the Adoption Agreement. However, for any Plan
Year in which this Plan is a Super Top Heavy Plan, one hundred
percent (100%) shall always be substituted for one hundred
twenty-five percent (125%).
(3) Defined Contribution Dollar Limitation means $30,000 as
adjusted under Code Section 415(d).
39
(4) Defined Contribution Fraction means a fraction, the numerator
of which is the sum of the "Annual Additions" to the
Participant's accounts under all the defined contribution plans
(whether or not terminated) maintained by the Employer for the
current and all prior "Limitation Years," (including the "Annual
Additions" attributable to the Participant's nondeductible
voluntary employee contributions to any defined benefit plans,
whether or not terminated, maintained by the Employer and the
"Annual Additions" attributable to all welfare benefit funds (as
defined in Code Section 419(e)), individual medical accounts (as
defined in Code Section 415(l)(2)), and simplified employee
pensions (as defined in Code Section 408(k)) maintained by the
Employer), and the denominator of which is the sum of the
"Maximum Aggregate Amounts" for the current and all prior
Limitation Years in which the Employee had service with the
Employer (regardless of whether a defined contribution plan was
maintained by the Employer). The maximum aggregate amount in any
Limitation Year is the lesser of one hundred twenty-five percent
(125%) of the dollar limitation determined under Code Section
415(c)(I)(A) as adjusted by Code Section 415(d) or thirty-five
percent (35%) of the Participant's 415 Compensation for such
year.
If the Employee was a Participant as of the end of the first
day of the first Limitation Year beginning after December 31,
1986, in one or more defined contribution plans maintained by the
Employer which were in existence on May 5, 1986, the numerator of
this fraction will be adjusted if the sum of this fraction and
the "Defined Benefit Fraction" would otherwise exceed 1.0 under
the terms of this Plan. Under the adjustment, an amount equal to
the product of (1) the excess of the sum of the fractions over
1.0 times (2) the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms
and conditions of the plan made after May 5, 1986, but using the
Code Section 415 limitation applicable to the first Limitation
Year beginning on or after January 1, 1987.
For Limitation Years beginning prior to January 1, 1987, the
"Annual Additions" shall not be recomputed to treat all Employee
contributions as "Annual Additions."
Notwithstanding the foregoing, for any Top Heavy Plan Year,
one hundred percent (100%) shall be substituted for one hundred
twenty-five percent (125%) unless the extra top heavy minimum
allocation or benefit is being made pursuant to the Employer's
specification in the Adoption Agreement. However, for any Plan
Year in which this Plan is a Super Top Heavy Plan, one hundred
percent (100%) shall always be substituted for one hundred
twenty-five percent (125%).
(5) "Employer" means the Employer that adopts this Plan and all
Affiliated Employers, except that for purposes of this Section,
the determination of whether an entity is an Affiliated Employer
40
shall be made by applying Code Section 415(h).
(6) "Excess Amount" means the excess of the Participant's "Annual
Additions" for the Limitation Year over the "Maximum Permissible
Amount."
(7) "Highest Average Compensation" means the average Compensation
for the three (3) consecutive Years of Service with the Employer
while a Participant in the Plan that produces the highest
average. A Year of Service with the Employer is the twelve (12)
consecutive month period ending on the last day of the Limitation
Year.
(8) "Master or Prototype Plan" means a plan the form of which is
the subject of a favorable opinion letter from the Internal
Revenue Service.
(9) "Maximum Permissible Amount" means the maximum Annual
Addition that may be contributed or allocated to a Participant's
accounts under the Plan for any "Limitation Year," which shall
not exceed the lesser of:
(i) the "Defined Contribution Dollar Limitation," or
(ii) twenty-five percent (25%) of the Participant's 415
Compensation for the "Limitation Year."
The Compensation Limitation referred to in (ii) shall
not apply to any contribution for medical benefits (within
the meaning of Code Sections 401(h) or 419A(f)(2)) which is
otherwise treated as an "Annual Addition."
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different twelve
(12) consecutive month period, the "Maximum Permissible
Amount" will not exceed the "Defined Contribution Dollar
Limitation multiplied by a fraction, the numerator of which
is the number of months in the short Limitation Year and the
denominator of which is twelve (12).
(10) "Projected Annual Benefit" means the annual retirement
benefit (adjusted to an actuarially equivalent "straight life
annuity" if such benefit is expressed in a form other than a
"straight life annuity" or qualified joint and survivor annuity)
to which the Participant would be entitled under the terms of the
plan assuming:
(i) the Participant will continue employment until Normal
Retirement Age (or current age, if later), and
(ii) the Participant's 415 Compensation for the current
Limitation Year and all other relevant factors used to
determine benefits under the Plan will remain constant for
all future Limitation Years.
41
For purposes of this subsection, "straight life annuity"
means an annuity that is payable in equal installments for
the life of the Participant that terminates upon the
Participant's death.
(g) Notwithstanding anything contained in this Section to
the contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder.
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
Allocation of "Annual Additions" (as defined in Section 4.4) to a
Participant's Combined Account for a Limitation Year generally will cease once
the limits of Section 4.4 have been reached for such Limitation Year. However,
if as a result of the allocation of Forfeitures, a reasonable error in
estimating a Participant's annual 415 Compensation, a reasonable error in
determining the amount of elective deferrals (within the meaning of Code Section
402(g)(3)) that may be made with respect to any Participant under the limits of
Section 4.4, or other facts and circumstances to which Regulation 1.415-6(b)(6)
shall be applicable, the "Annual Additions" under this Plan would cause the
maximum provided in Section 4.4 to be exceeded, the "Excess Amount" will be
disposed of in one of the following manners, as uniformly determined by the Plan
Administrator for all Participants similarly situated:
(a) Any after-tax voluntary Employee contributions (plus
attributable gains), to the extent they would reduce the Excess
Amount, will be distributed to the Participant;
(b) If, after the application of subparagraph (a), an "Excess
Amount" still exists, any unmatched Elective Deferrals (and for
Limitation Years beginning after December 31, 1995, any gains
attributable to such Elective Deferrals), to the extent they would
reduce the Excess Amount, will be distributed to the Participant;
(c) To the extent necessary, matched Elective Deferrals and
Employer matching contributions will be proportionately reduced from
the Participant's Account. The Elective Deferrals (and for Limitation
Years beginning after December 31, 1995, any gains attributable to
such Elective Deferrals) will be distributed to the Participant and
the Employer matching contributions (and for Limitation Years
beginning after December 31, 1995, any gains attributable to such
matching contributions) will be used to reduce the Employer's
contributions in the next Limitation Year;
(d) If, after the application of subparagraphs (a), (b) and (c),
an "Excess Amount" still exists, and the Participant is covered by the
Plan at the end of the Limitation Year, the "Excess Amount" in the
Participant's Account will be used to reduce Employer contributions
(including any allocation of Forfeitures) for such Participant in the
next Limitation Year, and each succeeding Limitation Year if
necessary;
(e) If, after the application of subparagraphs (a), (b) and (c),
an "Excess Amount" still exists, and the Participant is not covered by
the Plan at the end of a Limitation Year, the "Excess Amount" will be
held unallocated in a suspense account. The suspense account will be
applied to reduce future Employer contributions (including allocation
42
of any Forfeitures) for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if necessary; and
(f) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, no investment gains and
losses shall be allocated to such suspense account. If a suspense
account is in existence at any time during a particular Limitation
Year, all amounts in the suspense account must be allocated and
reallocated to Participants' Accounts before any Employer
contributions or any Employee contributions may be made to the Plan
for that Limitation Year. Except as provided in (a), (b) and (c)
above, "Excess Amounts" may not be distributed to Participants or
Former Participants.
4.6 ROLLOVERS
(a) If elected in the Adoption Agreement and with the consent of
the Administrator, the Plan may accept a "rollover," provided the
"rollover" will not jeopardize the tax-exempt status of the Plan or
create adverse tax consequences for the Employer. The amounts rolled
over shall be set up in a separate account herein referred to as a
"Participant's Rollover Account." Such account shall be fully Vested
at all times and shall not be subject to forfeiture for any reason.
For purposes of this Section, the term Participant shall include any
Eligible Employee who is not yet a Participant, if, pursuant to the
Adoption Agreement, "rollovers" are permitted to be accepted from
Eligible Employees. In addition, for purposes of this Section the term
Participant shall also include former Employees if the Employer and
Administrator consent to accept "rollovers" of distributions made to
former Employees from any plan of the Employer.
(b) Amounts in a Participant's Rollover Account shall be held by
the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as elected in the Adoption Agreement and subsection (c) below.
The Trustee shall have no duty or responsibility to inquire as to the
propriety of the amount, value or type of assets transferred, nor to
conduct any due diligence with respect to such assets; provided,
however, that such assets are otherwise eligible to be held by the
Trustee under the terms of this Plan.
(c) At Normal Retirement Date, or such other date when the
Participant or Eligible Employee or such Participant's or Eligible
Employee's Beneficiary shall be entitled to receive benefits, the
Participant's Rollover Account shall be used to provide additional
benefits to the Participant or the Participant's Beneficiary. Any
distribution of amounts held in a Participant's Rollover Account shall
be made in a manner which is consistent with and satisfies the
provisions of Sections 6.5 and 6.6, including, but not limited to, all
notice and consent requirements of Code Sections 411(a)(I 1) and 417
and the Regulations thereunder. Furthermore, such amounts shall be
considered to be part of a Participant's benefit in determining
whether an involuntary cash-out of benefits may be made without
Participant consent.
(d) The Administrator may direct that rollovers made after a
Valuation Date be segregated into a separate account for each
Participant until such time as the allocations pursuant to this Plan
have been made, at which time they may remain segregated,
43
invested as part of the general Trust Fund or, if elected in the
Adoption Agreement, directed by the Participant.
(e) For purposes of this Section, the term "qualified plan" shall
mean any tax qualified plan under Code Section 401(a), or any other
plans from which distributions are eligible to be rolled over into
this Plan pursuant to the Code. The term "rollover" means: (i) amounts
transferred to this Plan in a direct rollover made pursuant to Code
Section 401(a)(31) from another "qualified plan"; (ii) distributions
received by an Employee from other "qualified plans" which are
eligible for tax-free rollover to a "qualified plan" and which are
transferred by the Employee to this Plan within sixty (60) days
following receipt thereof; (iii) amounts transferred to this Plan from
a conduit individual retirement account provided that the conduit
individual retirement account has no assets other than assets which
(A) were previously distributed to the Employee by another "qualified
plan" (B) were eligible for tax-free rollover to a "qualified plan"
and (C) were deposited in such conduit individual retirement account
within sixty (60) days of receipt thereof; (iv) amounts distributed to
the Employee from a conduit individual retirement account meeting the
requirements of clause (iii) above, and transferred by the Employee to
this Plan within sixty (60) days of receipt thereof from such conduit
individual retirement account; and (v) any other amounts which are
eligible to be rolled over to this Plan pursuant to the Code.
(f) Prior to accepting any "rollovers" to which this Section
applies, the Administrator may require the Employee to establish (by
providing opinion of counsel or otherwise) that the amounts to be
rolled over to this Plan meet the requirements of this Section.
4.7 PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred (within the meaning of Code Section 414(1)) to this Plan
from other tax qualified plans under Code Section 401(a), provided the
plan from which such funds are transferred permits the transfer to be
made and the transfer will not jeopardize the tax-exempt status of the
Plan or Trust or create adverse tax consequences for the Employer.
Prior to accepting any transfers to which this Section applies, the
Administrator may require an opinion of counsel that the amounts to be
transferred meet the requirements of this Section. The amounts
transferred shall be set up in a separate account herein referred to
as a "Participant's Transfer Account." Furthermore, for Vesting
purposes, the Participant's Transfer Account shall be treated as a
separate "Participant's Account."
(b) Amounts in a Participant's Transfer Account shall be held by
the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as elected in the Adoption Agreement and subsection (d) below,
provided the restrictions of subsection (c) below and Section 6.15 are
satisfied. The Trustee shall have no duty or responsibility to inquire
as to the propriety of the amount, value or type of assets
transferred, nor to conduct any due diligence with respect to such
assets; provided, however, that such assets are otherwise eligible to
be held by the Trustee under the terms of this Plan.
44
(c) Except as permitted by Regulations (including Regulation
1.411 (d)-4), amounts attributable to elective contributions (as
defined in Regulation 1.401(k)-1(g)(3)), including amounts treated as
elective contributions, which are transferred from another qualified
plan in a plan-to-plan transfer (other than a direct rollover) shall
be subject to the distribution limitations provided for in Regulation
1.401(k)-I(d).
(d) At Normal Retirement Date, or such other date when the
Participant or the Participant's Beneficiary shall be entitled to
receive benefits, the Participant's Transfer Account shall be used to
provide additional benefits to the Participant or the Participant's
Beneficiary. Any distribution of amounts held in a Participant's
Transfer Account shall be made in a manner which is consistent with
and satisfies the provisions of Sections 6.5 and 6.6, including, but
not limited to, all notice and consent requirements of Code Sections
411(a)(11) and 417 and the Regulations thereunder. Furthermore, such
amounts shall be considered to be part of a Participant's benefit in
determining whether an involuntary cash-out of benefits may be made
without Participant consent.
(e) The Administrator may direct that Employee transfers made
after a Valuation Date be segregated into a separate account for each
Participant until such time as the allocations pursuant to this Plan
have been made, at which time they may remain segregated, invested as
part of the general Trust Fund or, if elected in the Adoption
Agreement, directed by the Participant.
(f) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction
having the effect of such a transfer) shall only be permitted if it
will not result in the elimination or reduction of any "Section 411
(d)(6) protected benefit" as described in Section 8.1(e).
4.8 VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) Except as provided in subsection 4.8(b) below, this Plan will
not accept after-tax voluntary Employee contributions. If this is an
amendment to a Plan that had previously allowed after-tax voluntary
Employee contributions, then this Plan will not accept after-tax
voluntary Employee contributions for Plan Years beginning after the
Plan Year in which this Plan is adopted by the Employer.
(b) For 401(k) Plans, if elected in the Adoption Agreement, each
Participant who is eligible to make Elective Deferrals may, in
accordance with nondiscriminatory procedures established by the
Administrator, elect to make after-tax voluntary Employee
contributions to this Plan. Such contributions must generally be paid
to the Trustee within a reasonable period of time after being received
by the Employer.
(c) The balance in each Participant's Voluntary Contribution
Account shall be fully Vested at all times and shall not be subject to
Forfeiture for any reason.
(d) A Participant may elect at any time to withdraw after-tax
voluntary Employee contributions from such Participant's Voluntary
Contribution Account and the actual earnings thereon in a manner which
is consistent with and satisfies the provisions of Section 6.5,
including, but not limited to, all notice and consent requirements of
Code Sections
45
411(a)(11) and 417 and the Regulations thereunder. If the
Administrator maintains sub-accounts with respect to after-tax
voluntary Employee contributions (and earnings thereon) which were
made on or before a specified date, a Participant shall be permitted
to designate which sub-account shall be the source for the withdrawal.
Forfeitures of Employer contributions shall not occur solely as a
result of an Employee's withdrawal of after-tax voluntary Employee
contributions.
In the event a Participant has received a hardship distribution
pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any plan
maintained by the Employer, then the Participant shall be barred from
making any after-tax voluntary Employee contributions for a period of
twelve (12) months after receipt of the hardship distribution.
(e) At Normal Retirement Date, or such other date when the
Participant or the Participant's Beneficiary is entitled to receive
benefits, the Participant's Voluntary Contribution Account shall be
used to provide additional benefits to the Participant or the
Participant's Beneficiary.
(f) To the extent a Participant has previously made mandatory
Employee contributions under prior provisions of this Plan, such
contributions will be treated as after-tax voluntary Employee
contributions.
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If this is an amendment to a Plan that previously permitted
deductible voluntary Employee contributions, then each Participant who
made "Qualified Voluntary Employee Contributions" within the meaning
of Code Section 219(e)(2) as it existed prior to the enactment of the
Tax Reform Act of 1986, shall have such contributions held in a
separate Qualified Voluntary Employee Contribution Account which shall
be fully Vested at all times. Such contributions, however, shall not
be permitted for taxable years beginning after December 31, 1986.
(b) A Participant may, upon written request delivered to the
Administrator, make withdrawals from such Participant's Qualified
Voluntary Employee Contribution Account. Any distribution shall be
made in a manner which is consistent with and satisfies the provisions
of Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
(c) At Normal Retirement Date, or such other date when the
Participant or the Participant's Beneficiary is entitled to receive
benefits, the Qualified Voluntary Employee Contribution Account shall
be used to provide additional benefits to the Participant or the
Participant's Beneficiary.
4.10 DIRECTED INVESTMENT ACCOUNT
(a) If elected in the Adoption Agreement, all Participants may
direct the Trustee as to the investment of all or a portion of their
individual account balances as set forth in the Adoption Agreement and
within limits set by the Employer. Participants may direct the
Trustee, in writing (or in such other form which is acceptable to the
Trustee), to invest their accounts in specific
46
assets, specific funds or other investments permitted under the Plan
and the Participant Direction Procedures. That portion of the account
of any Participant that is subject to investment direction of such
Participant will be considered a Participant Directed Account.
(b) The Administrator will establish a Participant Direction
Procedure, to be applied in a uniform and nondiscriminatory manner,
setting forth the permissible investment options under this Section,
how often changes between investments may be made, and any other
limitations and provisions that the Administrator may impose on a
Participant's right to direct investments.
(c) The Administrator may, in its discretion, include or exclude
by amendment or other action from the Participant Direction Procedures
such instructions, guidelines or policies as it deems necessary or
appropriate to ensure proper administration of the Plan, and may
interpret the same accordingly.
(d) As of each Valuation Date, all Participant Directed Accounts
shall be charged or credited with the net earnings, gains, losses and
expenses as well as any appreciation or depreciation in the market
value using publicly listed fair market values when available or
appropriate as follows:
(1) to the extent the assets in a Participant Directed Account
are accounted for as pooled assets or investments, the allocation
of earnings, gains and losses of each Participant's Account shall
be based upon the total amount of funds so invested in a manner
proportionate to the Participant's share of such pooled
investment; and
(2) to the extent the assets in a Participant Directed Account
are accounted for as segregated assets, the allocation of
earnings, gains on and losses from such assets shall be made on a
separate and distinct basis.
(e) Investment directions will be processed as soon as
administratively practicable after proper investment directions are
received from the Participant. No guarantee is made by the Plan,
Employer, Administrator or Trustee that investment directions will be
processed on a daily basis, and no guarantee is made in any respect
regarding the processing time of an investment direction.
Notwithstanding any other provision of the Plan, the Employer,
Administrator or Trustee reserves the right to not value an investment
option on any given Valuation Date for any reason deemed appropriate
by the Employer, Administrator or Trustee. Furthermore, the processing
of any investment transaction may be delayed for any legitimate
business reason (including, but not limited to, failure of systems or
computer programs, failure of the means of the transmission of data,
force majeure, the failure of a service provider to timely receive
values or prices, and correction for errors or omissions or the errors
or omissions of any service provider). The processing date of a
transaction will be binding for all purposes of the Plan and
considered the applicable Valuation Date for an investment
transaction.
47
(f) If the Employer has elected in the Adoption Agreement that it
intends to operate any portion of this Plan as an Act Section 404(c)
plan, the Participant Direction Procedures should provide an
explanation of the circumstances under which Participants and their
Beneficiaries may give investment instructions, including but not
limited to, the following:
(1) the conveyance of instructions by the Participants and their
Beneficiaries to invest Participant Directed Accounts in a
Directed Investment Option;
(2) the name, address and phone number of the Fiduciary (and, if
applicable, the person or persons designated by the Fiduciary to
act on its behalf) responsible for providing information to the
Participant or a Beneficiary upon request relating to the
Directed Investment Options;
(3) applicable restrictions on transfers to and from any
Designated Investment Alternative;
(4) any restrictions on the exercise of voting, tender and
similar rights related to a Directed Investment Option by the
Participants or their Beneficiaries;
(5) a description of any transaction fees and expenses which
affect the balances in Participant Directed Accounts in
connection with the purchase or sale of a Directed Investment
Option; and
(6) general procedures for the dissemination of investment and
other information relating to the Designated Investment
Alternatives as deemed necessary or appropriate, including but
not limited to a description of the following:
(i) the investment vehicles available under the Plan,
including specific information regarding any Designated
Investment Alternative;
(ii) any designated Investment Managers; and
(iii) a description of the additional information that may
be obtained upon request from the Fiduciary designated to
provide such information.
(g) With respect to those assets in a Participant's Directed
Account, the Participant or Beneficiary shall direct the Trustee with
regard to any voting, tender and similar rights associated with the
ownership of such assets (hereinafter referred to as the "Stock
Rights") as follows based on the election made in the Adoption
Agreement:
(1) each Participant or Beneficiary shall direct the Trustee to
vote or otherwise exercise such Stock Rights in accordance with
the provisions, conditions and terms of any such Stock Rights;
(2) such directions shall be provided to the Trustee by the
Participant or Beneficiary in accordance with the procedure as
established by the Administrator and the Trustee shall vote or
48
otherwise exercise such Stock Rights with respect to which it has
received directions to do so under this Section; and
(3) to the extent to which a Participant or Beneficiary does not
instruct the Trustee to vote or otherwise exercise such Stock
Rights, such Participants or Beneficiaries shall be deemed to
have directed the Trustee that such Stock Rights remain nonvoted
and unexercised. (h) Any information regarding investments
available under the Plan, to the extent not required to be
described in the Participant Direction Procedures, may be
provided to Participants in one or more documents (or in any
other form, including, but not limited to, electronic media)
which are separate from the Participant Direction Procedures and
are not thereby incorporated by reference into this Plan.
4.11 INTEGRATION IN MORE THAN ONE PLAN
If the Employer maintains qualified retirement plans that provide
for permitted disparity (integration), the provisions of Section 4.3(b)(4) will
apply. Furthermore, if the Employer maintains two or more standardized paired
plans, only one plan may provide for permitted disparity.
4.12 QUALIFIED MILITARY SERVICE
Notwithstanding any provisions of this Plan to the contrary,
effective as of the later of December 12, 1994, or the Effective Date of the
Plan, contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Code Section 414(u).
Furthermore, loan repayments may be suspended under this Plan as permitted under
Code Section 414(u)(4).
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation
Date, to determine the net worth of the assets comprising the Trust Fund as it
exists on the Valuation Date. In determining such net worth, the Trustee shall
value the assets comprising the Trust Fund at their fair market value (or their
contractual value in the case of a Contract or Policy) as of the Valuation Date
and may deduct all expenses for which the Trustee has not yet been paid by the
Employer or the Trust Fund. The Trustee may update the value of any shares held
in a Participant Directed Account by reference to the number of shares held on
behalf of the Participant, priced at the market value as of the Valuation Date.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust
Fund which are listed on a registered stock exchange, the Administrator shall
direct the Trustee to value the same at the prices they were last traded on such
exchange preceding the close of business on the Valuation Date. If such
securities were not traded on the Valuation Date, or if the exchange on which
49
they are traded was not open for business on the Valuation Date, then the
securities shall be valued at the prices at which they were last traded prior to
the Valuation Date. Any unlisted security held in the Trust Fund shall be valued
at its bid price next preceding the close of business on the Valuation Date,
which bid price shall be obtained from a registered broker or an investment
banker. In determining the fair market value of assets other than securities for
which trading or bid prices can be obtained, the Trustee may appraise such
assets itself, or in its discretion, employ one or more appraisers for that
purpose and rely on the values established by such appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate employment with the Employer and
retire for purposes hereof on the Participant's Normal Retirement Date or Early
Retirement Date. However, a Participant may postpone the termination of
employment with the Employer to a later date, in which event the participation
of such Participant in the Plan, including the right to receive allocations
pursuant to Section 4.3, shall continue until such Participant's Retirement
Date. Upon a Participant's Retirement Date, or if elected in the Adoption
Agreement, the attainment of Normal Retirement Date without termination of
employment with the Employer, or as soon thereafter as is practicable, the
Administrator shall direct the distribution, at the election of the Participant,
of the Participant's entire Vested interest in the Plan in accordance with
Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before the Participant's
Retirement Date or other termination of employment, all amounts
credited to such Participant's Combined Account shall, if elected in
the Adoption Agreement, become fully Vested. The Administrator shall
direct, in accordance with the provisions of Sections 6.6 and 6.7, the
distribution of the deceased Participant's Vested accounts to the
Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct, in accordance with the provisions of Sections 6.6 and
6.7, the distribution of any remaining Vested amounts credited to the
accounts of such deceased Former Participant to such Former
Participant's Beneficiary.
(c) The Administrator may require such proper proof of death and
such evidence of the right of any person to receive payment of the
value of the account of a deceased Participant or Former Participant
as the Administrator may deem desirable. The Administrator's
determination of death and of the right of any person to receive
payment shall be conclusive.
(d) Unless otherwise elected in the manner prescribed in Section
6.6, the Beneficiary of the Pre-Retirement Survivor Annuity shall be
50
the Participant's surviving spouse. Except, however, the Participant
may designate a Beneficiary other than the spouse for the
Pre-Retirement Survivor Annuity if:
(1) the Participant and the Participant's spouse have validly
waived the Pre-Retirement Survivor Annuity in the manner
prescribed in Section 6.6, and the spouse has waived the right to
be the Participant's Beneficiary,
(2) the Participant is legally separated or has been abandoned
(within the meaning of local law) and the Participant has a court
order to such effect (and there is no "qualified domestic
relations order" as defined in Code Section 414(p) which provides
otherwise),
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on
a form satisfactory to the Administrator. A Participant may at any
time revoke a designation of a Beneficiary or change a Beneficiary by
filing written (or in such other form as permitted by the IRS) notice
of such revocation or change with the Administrator. However, the
Participant's spouse must again consent in writing (or in such other
form as permitted by the IRS) to any change in Beneficiary unless the
original consent acknowledged that the spouse had the right to limit
consent only to a specific Beneficiary and that the spouse voluntarily
elected to relinquish such right.
(e) A Participant may, at any time, designate a Beneficiary for
death benefits, if any, payable under the Plan that are in excess of
the Pre-Retirement Survivor Annuity without the waiver or consent of
the Participant's spouse. In the event no valid designation of
Beneficiary exists, or if the Beneficiary is not alive at the time of
the Participant's death, the death benefit will be paid in the
following order of priority, unless the Employer specifies a different
order of priority in an addendum to the Adoption Agreement, to:
(1) The Participant's surviving spouse;
(2) The Participant's children, including adopted children, per
stirpes
(3) The Participant's surviving parents, in equal shares; or
(4) The Participant's estate.
If the Beneficiary does not predecease the Participant, but dies prior
to distribution of the death benefit, the death benefit will be paid
to the Beneficiary's estate.
(f) Notwithstanding anything in this Section to the contrary, if
a Participant has designated the spouse as a Beneficiary, then a
divorce decree or a legal separation that relates to such spouse shall
revoke the Participant's designation of the spouse as a Beneficiary
unless the decree or a qualified domestic relations order (within the
meaning of Code Section 414(p)) provides otherwise or a subsequent
51
Beneficiary designation is made.
(g) If the Plan provides an insured death benefit and a
Participant dies before any insurance coverage to which the
Participant is entitled under the Plan is effected, the death benefit
from such insurance coverage shall be limited to the premium which was
or otherwise would have been used for such purpose.
(h) In the event of any conflict between the terms of this Plan
and the terms of any Contract issued hereunder, the Plan provisions
shall control.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability
prior to the Participant's Retirement Date or other termination of
employment, all amounts credited to such Participant's Combined
Account shall, if elected in the Adoption Agreement, become fully
Vested. In the event of a Participant's Total and Permanent
Disability, the Administrator, in accordance with the provisions of
Sections 6.5 and 6.7, shall direct the distribution to such
Participant of the entire Vested interest in the Plan.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Employer is terminated
for any reason other than death, Total and Permanent Disability, or
retirement, then such Participant shall be entitled to such benefits
as are provided herein.
Distribution of the funds due to a Terminated Participant shall
be made on the occurrence of an event which would result in the
distribution had the Terminated Participant remained in the employ of
the Employer (upon the Participant's death, Total and Permanent
Disability, Early or Normal Retirement). However, at the election of
the Participant, the Administrator shall direct that the entire Vested
portion of the Terminated Participant's Combined Account be payable to
such Terminated Participant provided the conditions, if any, set forth
in the Adoption Agreement have been satisfied. Any distribution under
this paragraph shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including but not limited to,
all notice and consent requirements of Code Sections 411(a)(11) and
417 and the Regulations thereunder.
Regardless of whether distributions in kind are permitted, in the
event the amount of the Vested portion of the Terminated Participant's
Combined Account equals or exceeds the fair market value of any
insurance Contracts, the Trustee, when so directed by the
Administrator and agreed to by the Terminated Participant, shall
assign, transfer, and set over to such Terminated Participant all
Contracts on such Terminated Participant's life in such form or with
such endorsements, so that the settlement options and forms of payment
are consistent with the provisions of Section 6.5. In the event that
the Terminated Participant's Vested portion does not at least equal
the fair market value of the Contracts, if any, the Terminated
Participant may pay over to the Trustee the sum needed to make the
distribution equal to the value of the Contracts being assigned or
transferred, or the Trustee, pursuant to the Participant's election,
may borrow the cash value of the Contracts from the Insurer so that
52
the value of the Contracts is equal to the Vested portion of the
Terminated Participant's Combined Account and then assign the
Contracts to the Terminated Participant.
Notwithstanding the above, unless otherwise elected in the
Adoption Agreement, if the value of a Terminated Participant's Vested
benefit derived from Employer and Employee contributions does not
exceed $5,000 (or, $3,500 for distributions made prior to the later of
the first day of the first Plan Year beginning on or after August 5,
1997, or the date specified in the Adoption Agreement) the
Administrator shall direct that the entire Vested benefit be paid to
such Participant in a single lump-sum without regard to the consent of
the Participant or the Participant's spouse. A Participant's Vested
benefit shall not include Qualified Voluntary Employee Contributions
within the meaning of Code Section 72(o)(5)(B) for Plan Years
beginning prior to January 1, 1989. Furthermore, the determination of
whether the $5,000 (or, if applicable, $3,500) threshold has been
exceeded is generally based on the value of the Vested benefit as of
the Valuation Date preceding the date of the distribution. However, if
the "lookback rule" applies, the applicable threshold is deemed to be
exceeded if the Vested benefit exceeded the applicable threshold at
the time of any prior distribution. The "lookback rule" generally
applies to all distributions made prior to March 22, 1999. With
respect to distributions made on or after March 22, 1999, the
"lookback rule" applies if either (1) the provisions of Section 6.12
do not apply or (2) a Participant has begun to receive distributions
pursuant to an optional form of benefit under which at least one
scheduled periodic distribution has not yet been made, and if the
value of the Participant's benefit, determined at the time of the
first distribution under that optional form of benefit exceeded the
applicable threshold. However, the Plan does not fail to satisfy the
requirements of this paragraph if, prior to the adoption of this
Prototype Plan, the "lookback rule" was applied to all distributions.
Notwithstanding the preceding, the "lookback rule" will not apply to
any distributions made on or after October 17, 2000.
(b) The Vested portion of any Participant's Account shall be a
percentage of such Participant's Account determined on the basis of
the Participant's number of Years of Service (or Periods of Service if
the Elapsed Time Method is elected) according to the vesting schedule
specified in the Adoption Agreement. However, a Participant's entire
interest in the Plan shall be non-forfeitable upon the Participant's
Normal Retirement Age (if the Participant is employed by the Employer
on or after such date).
(c) For any Top Heavy Plan Year, the minimum top heavy vesting
schedule elected by the Employer in the Adoption Agreement will
automatically apply to the Plan. The minimum top heavy vesting
schedule applies to all benefits within the meaning of Code Section
411(a)(7) except those attributable to Employee contributions,
including benefits accrued before the effective date of Code Section
416 and benefits accrued before the Plan became top heavy. Further, no
decrease in a Participant's Vested percentage shall occur in the event
the Plan's status as top heavy changes for any Plan Year. However,
this Section does not apply to the account balances of any Employee
who does not have an Hour of Service after the Plan has initially
become top heavy and the Vested percentage of such Employee's
Participant's Account shall be determined without regard to this
Section 6.4(c).
53
If in any subsequent Plan Year the Plan ceases to be a Top Heavy
Plan, then unless a specific Plan amendment is made to provide
otherwise, the Administrator will continue to use the vesting schedule
in effect while the Plan was a Top Heavy Plan.
(d) Upon the complete discontinuance of the Employer's
contributions to the Plan (if this is a profit sharing plan) or upon
any full or partial termination of the Plan, all amounts then credited
to the account of any affected Participant shall become 100% Vested
and shall not thereafter be subject to Forfeiture.
(e) If this is an amended or restated Plan, then notwithstanding
the vesting schedule specified in the Adoption Agreement, the Vested
percentage of a Participant's Account shall not be less than the
Vested percentage attained as of the later of the effective date or
adoption date of this amendment and restatement. The computation of a
Participant's nonforfeitable percentage of such Participant's interest
in the Plan shall not be reduced as the result of any direct or
indirect amendment to this Article, or due to changes in the Plan's
status as a Top Heavy Plan. Furthermore, if the Plan's vesting
schedule is amended, then the amended schedule will only apply to
those Participants who complete an Hour of Service after the effective
date of the amendment.
(f) If the Plan's vesting schedule is amended, or if the Plan is
amended in any way that directly or indirectly affects the computation
of the Participant's nonforfeitable percentage or if the Plan is
deemed amended by an automatic change to a top heavy vesting schedule,
then each Participant with at least three (3) Years of Service (or
Periods of Service if the Elapsed Time Method is elected) as of the
expiration date of the election period may elect to have such
Participant's nonforfeitable percentage computed under the Plan
without regard to such amendment or change. If a Participant fails to
make such election, then such Participant shall be subject to the new
vesting schedule. The Participant's election period shall commence on
the adoption date of the amendment and shall end sixty (60) days after
the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the amendment
from the Employer or Administrator.
(g) In determining Years of Service or Periods of Service for
purposes of vesting under the Plan, Years of Service or Periods of
Service shall be excluded as elected in the Adoption Agreement.
6.5 DISTRIBUTION OF BENEFITS
(a)(1) Unless otherwise elected as provided below, a Participant
who is married on the Annuity Starting Date and who does not die
before the Annuity Starting Date shall receive the value of all Plan
benefits in the form of a Joint and Survivor Annuity. The Joint and
Survivor Annuity is an annuity that commences immediately and shall be
equal in value to a single life annuity. Such joint and survivor
54
benefits following the Participant's death shall continue to the
spouse during the spouse's lifetime at a rate equal to either fifty
percent (50%), seventy-five percent (75%) (or, sixty-six and
two-thirds percent (66 2/3%) if the Insurer used to provide the
annuity does not offer a joint and seventy-five percent (75%)
annuity), or one hundred percent (100%) of the rate at which such
benefits were payable to the Participant. Unless otherwise elected in
the Adoption Agreement, a joint and fifty percent (50%) survivor
annuity shall be considered the designated qualified Joint and
Survivor Annuity and the normal form of payment for the purposes of
this Plan. However, the Participant may, without spousal consent,
elect an alternative Joint and Survivor Annuity, which alternative
shall be equal in value to the designated qualified Joint and Survivor
Annuity. An unmarried Participant shall receive the value of such
Participant's benefit in the form of a life annuity. Such unmarried
Participant, however, may elect to waive the life annuity. The
election must comply with the provisions of this Section as if it were
an election to waive the Joint and Survivor Annuity by a married
Participant, but without fulfilling the spousal consent requirement.
The Participant may elect to have any annuity provided for in this
Section distributed upon the attainment of the "earliest retirement
age" under the Plan. The "earliest retirement age" is the earliest
date on which, under the Plan, the Participant could elect to receive
retirement benefits.
(2) Any election to waive the Joint and Survivor Annuity must be
made by the Participant in writing (or in such other form as
permitted by the IRS) during the election period and be consented
to in writing (or in such other form as permitted by the IRS) by
the Participant's spouse. If the spouse is legally incompetent to
give consent, the spouse's legal guardian, even if such guardian
is the Participant, may give consent. Such election shall
designate a Beneficiary (or a form of benefits) that may not be
changed without spousal consent (unless the consent of the spouse
expressly permits designations by the Participant without the
requirement of further consent by the spouse). Such spouse's
consent shall be irrevocable and must acknowledge the effect of
such election and be witnessed by a Plan representative or a
notary public. Such consent shall not be required if it is
established to the satisfaction of the Administrator that the
required consent cannot be obtained because there is no spouse,
the spouse cannot be located, or other circumstances that may be
prescribed by Regulations. The election made by the Participant
and consented to by such Participant's spouse may be revoked by
the Participant in writing (or in such other form as permitted by
the IRS) without the consent of the spouse at any time during the
election period. A revocation of a prior election shall cause the
Participant's benefits to be distributed as a Joint and Survivor
Annuity. The number of revocations shall not be limited. Any new
election must comply with the requirements of this paragraph. A
former spouse's waiver shall not be binding on a new spouse.
(3) The election period to waive the Joint and Survivor Annuity
shall be the ninety (90) day period ending on the Annuity
Starting Date.
(4) For purposes of this Section, spouse or surviving spouse
means the spouse or surviving spouse of the Participant, provided
that a former spouse will be treated as the spouse or surviving
55
spouse and a current spouse will not be treated as the spouse or
surviving spouse to the extent provided under a qualified
domestic relations order as described in Code Section 414(p).
(5) With regard to the election, except as otherwise provided
herein, the Administrator shall provide to the Participant no
less than thirty (30) days and no more than ninety (90) days
before the Annuity Starting Date a written (or such other form as
permitted by the IRS) explanation of:
(i) the terms and conditions of the Joint and Survivor
Annuity,
(ii) the Participant's right to make and the effect of an
election to waive the Joint and Survivor Annuity,
(iii) the right of the Participant's spouse to consent to
any election to waive the Joint and Survivor Annuity, and
(iv) the right of the Participant to revoke such election,
and the effect of such revocation.
(6) Any distribution provided for in this Section made on or
after December 31, 1996, may commence less than thirty (30) days
after the notice required by Code Section 417(a)(3) is given
provided the following requirements are satisfied:
(i) the Administrator clearly informs the Participant that
the Participant has a right to a period of thirty (30) days
after receiving the notice to consider whether to waive the
Joint and Survivor Annuity and to elect (with spousal
consent) a form of distribution other than a Joint and
Survivor Annuity;
(ii) the Participant is permitted to revoke any affirmative
distribution election at least until the Annuity Starting
Date or, if later, at any time prior to the expiration of
the seven (7) day period that begins the day after the
explanation of the Joint and Survivor Annuity is provided to
the Participant;
(iii) the Annuity Starting Date is after the time that the
explanation of the Joint and Survivor Annuity is provided to
the Participant. However, the Annuity Starting Date may be
before the date that any affirmative distribution election
is made by the Participant and before the date that the
distribution is permitted to commence under (iv) below; and
(iv) distribution in accordance with the affirmative
election does not commence before the expiration of the
seven (7) day period that begins the day after the
explanation of the Joint and Survivor Annuity is provided to
the Participant.
(b) In the event a married Participant duly elects pursuant
to paragraph (a)(2) above not to receive the benefit in the form
of a Joint and Survivor Annuity, or if such Participant is not
56
married, in the form of a life annuity, the Administrator,
pursuant to the election of the Participant, shall direct the
distribution to a Participant or Beneficiary any amount to which
the Participant or Beneficiary is entitled under the Plan in one
or more of the following methods which are permitted pursuant to
the Adoption Agreement:
(1) One lump-sum payment in cash or in property that is allocated
to the accounts of the Participant at the time of the
distribution;
(2) Partial withdrawals;
(3) Payments over a period certain in monthly, quarterly,
semiannual, or annual cash installments. In order to provide such
installment payments, the Administrator may (A) segregate the
aggregate amount thereof in a separate, federally insured savings
account, certificate of deposit in a bank or savings and loan
association, money market certificate or other liquid short-term
security or (B) purchase a nontransferable annuity contract for a
term certain (with no life contingencies) providing for such
payment. The period over which such payment is to be made shall
not extend beyond the Participant's life expectancy (or the life
expectancy of the Participant and the Participant's designated
Beneficiary);
(4) Purchase of or providing an annuity. However, such annuity
may not be in any form that will provide for payments over a
period extending beyond either the life of the Participant (or
the lives of the Participant and the Participant's designated
Beneficiary) or the life expectancy of the Participant (or the
life expectancy of the Participant and the Participant's
designated Beneficiary).
(c) Benefits may not be paid without the Participant's and the
Participant's spouse's consent if the present value of the
Participant's Joint and Survivor Annuity derived from Employer and
Employee contributions exceeds, or has ever exceeded, $5,000 (or
$3,500, for distributions made prior to the later of the first day of
the first Plan Year beginning after August 5, 1997, or the date
specified in the Adoption Agreement) and the benefit is "immediately
distributable." However, spousal consent is not required if the
distribution will made in the form a Qualified Joint and Survivor
Annuity and the benefit is "immediately distributable." A benefit is
"immediately distributable" if any part of the benefit could be
distributed to the Participant (or surviving spouse) before the
Participant attains (or would have attained if not deceased) the later
of the Participant's Normal Retirement Age or age 62.
If the value of the Participant's benefit derived from Employer
and Employee contributions does not exceed, and has never exceeded at
the time of any prior distribution, $5,000 (or, if applicable,
$3,500), then the Administrator will distribute such benefit in a
lump-sum without such Participant's consent. No distribution may be
made under the preceding sentence after the Annuity Starting Date
unless the Participant and the Participant's spouse consent in writing
(or in such other form as permitted by the IRS) to such distribution.
Any consent required under this paragraph must be obtained not more
than ninety (90) days before commencement of the distribution and
shall be made in a manner consistent with Section 6.5(a)(2).
Notwithstanding the preceding, the "lookback rule" (which provides
57
that if the present value at the time of a prior distribution exceeded
the applicable dollar threshold, then the present value at any
subsequent time is deemed to exceed the threshold) will not apply to
any distributions made on or after October 17, 2000.
(d) The following rules will apply with respect to the consent
requirements set forth in subsection (c):
(1) No consent shall be valid unless the Participant has received
a general description of the material features and an explanation
of the relative values of the optional forms of benefit available
under the Plan that would satisfy the notice requirements of Code
Section 417;
(2) The Participant must be informed of the right to defer
receipt of the distribution. If a Participant fails to consent,
it shall be deemed an election to defer the commencement of
payment of any benefit. However, any election to defer the
receipt of benefits shall not apply with respect to distributions
that are required under Section 6.5(e);
(3) Notice of the rights specified under this paragraph shall be
provided no less than thirty (30) days and no more than ninety
(90) days before the Annuity Starting Date;
(4) Written (or such other form as permitted by the IRS) consent
of the Participant to the distribution must not be made before
the Participant receives the notice and must not be made more
than ninety (90) days before the Annuity Starting Date; and
(5) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to
the distribution.
(e) Notwithstanding any provision in the Plan to the contrary,
for Plan Years beginning after December 31, 1996, the distribution of
a Participant's benefits, whether under the Plan or through the
purchase of an annuity Contract, shall be made in accordance with the
following requirements and shall otherwise comply with Code Section
401 (a)(9) and the Regulations thereunder (including Regulation
1_401(a)(9)-2):
(1) A Participant's benefits will be distributed or must begin to
be distributed not later than the Participant's "required
beginning date." Alternatively, distributions to a Participant
must begin no later than the Participant's "required beginning
date" and must be made over the life of the Participant (or the
lives of the Participant and the Participant's designated
Beneficiary) or the life expectancy of the Participant (or the
life expectancies of the Participant and the Participant's
designated Beneficiary) in accordance with Regulations. However,
if the distribution is to be in the form of a joint and survivor
annuity or single life annuity, then distributions must begin no
later than the "required beginning date" and must be made over
the life of the Participant (or the lives of the Participant and
the Participant's designated Beneficiary) in accordance with
Regulations.
58
(2) The "required beginning date" for a Participant who is a
"five percent (5%) owner" with respect to the Plan Year ending in
the calendar year in which such Participant attains age 70 1/2
means April lst of the calendar year following the calendar year
in which the Participant attains age 70 1/2. Once distributions
have begun to a "five percent (5%) owner" under this subsection,
they must continue to be distributed, even if the Participant
ceases to be a "five percent (5%) owner" in a subsequent year.
(3) The "required beginning date" for a Participant other than a
"five percent (5%) owner" means, unless the Employer has elected
to continue the pre-SBJPA rules in the Adoption Agreement, April
1st of the calendar year following the later of the calendar year
in which the Participant attains age 70 1/2 or the calendar year
in which the Participant retires.
(4) If the election is made to continue the pre-SBJPA rules, then
except as provided below, the "required beginning date" is April
1st of the calendar year following the calendar year in which a
Participant attains age 70 1/2.
(i) However, the "required beginning date" for a Participant
who had attained age 70 1/2 before January 1, 1988, and was
not a five percent (5%) owner (within the meaning of Code
Section 416) at any time during the Plan Year ending with or
within the calendar year in which the Participant attained
age 66 1/2 or any subsequent Plan Year, is April 1st of the
calendar year following the calendar in which the
Participant retires.
(ii) Notwithstanding (i) above, the "required beginning
date" for a Participant who was a five percent (5%) owner
(within the meaning of Code Section 416) at any time during
the five (5) Plan Year period ending in the calendar year in
which the Participant attained age 70 1/2 is April 1st of
the calendar year in which the Participant attained age 70
1/2. In the case of a Participant who became a five percent
(5%) owner during any Plan Year after the calendar year in
which the Participant attained age 70 1/2, the "required
beginning date" is April 1st of the calendar year following
the calendar year in which such subsequent Plan Year ends.
(5) If this is an amendment or restatement of a plan that
contained the pre-SBJPA rules and an election is made to use the
post-SBJPA rules, then the transition rules elected in the
Adoption Agreement will apply.
(6) Except as otherwise provided herein, "five percent (5%)
owner" means, for purposes of this Section, a Participant who is
a five percent (5%) owner as defined in Code Section 416 at any
time during the Plan Year ending with or within the calendar year
in which such owner attains age 70 1/2.
(7) Distributions to a Participant and such Participant's
Beneficiaries will only be made in accordance with the incidental
death benefit requirements of Code Section 401(a)(9)(G) and the
Regulations thereunder.
59
(8) For purposes of this Section, the life expectancy of a
Participant and/or a Participant's spouse (other than in the case
of a life annuity) shall or shall not be redetermined annually as
elected in the Adoption Agreement and in accordance with
Regulations. If the Participant or the Participant's spouse may
elect, pursuant to the Adoption Agreement, to have life
expectancies recalculated, then the election, once made shall be
irrevocable. If no election is made by the time distributions
must commence, then the life expectancy of the Participant and
the Participant's spouse shall not be subject to recalculation.
Life expectancy and joint and last survivor life expectancy shall
be computed using the return multiples in Tables V and VI of
Regulation Section 1.72-9.
(9) With respect to distributions under the Plan made for
calendar years beginning on or after January 1, 2001, or if
later, the date specified in the Adoption Agreement, the Plan
will apply the minimum distribution requirements of Code Section
401(a)(9) in accordance with the Regulations under section
401(a)(9) that were proposed on January 17, 2001, notwithstanding
any provision of the Plan to the contrary. This amendment shall
continue in effect until the end of the last calendar year
beginning before the effective date of final Regulations under
section 401 (a)(9) or such other date as may be specified in
guidance published by the Internal Revenue Service.
However, if the date specified in the Adoption Agreement is a
date in 2001 other than January 1, 2001, then with respect to
distributions under the Plan made on or after such date for
calendar years beginning on or after January 1, 2001, the Plan
will apply the minimum distribution requirements of Code Section
401(a)(9) in accordance with the Regulations under section
401(a)(9) that were proposed on January 17, 2001, notwithstanding
any provision of the Plan to the contrary. If the total amount of
required minimum distributions made to a participant for 2001
prior to the specified date are equal to or greater than the
amount of required minimum distributions determined under the
2001 Proposed Regulations, then no additional distributions are
required for such participant for 2001 on or after such date. If
the total amount of required minimum distributions made to a
participant for 2001 prior to the specified date are less than
the amount determined under the 2001 Proposed Regulations, then
the amount of required minimum distributions for 2001 on or after
such date will be determined so that the total amount of required
minimum distributions for 2001 is the amount determined under the
2001 Proposed Regulations. This amendment shall continue in
effect until the end of the last calendar year beginning before
the effective date of final Regulations under section 401(a)(9)
or such other date as may be specified in guidance published by
the Internal Revenue Service.
(f) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of any
annuity Contract purchased and distributed to a Participant or spouse
shall comply with all of the requirements of this Plan.
(g) Subject to the spouse's right of consent afforded under the
Plan, the restrictions imposed by this Section shall not apply if a
Participant has, prior to January 1, 1984, made a written designation
60
to have retirement benefits paid in an alternative method acceptable
under Code Section 401 (a) as in effect prior to the enactment of the
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).
(h) If a distribution is made to a Participant who has not
severed employment and who is not fully Vested in the Participant's
Account, and the Participant may increase the Vested percentage in
such account, then at any relevant time the Participant's Vested
portion of the account will be equal to an amount ("X") determined by
the formula:
X equals P (AB plus D) -D
For purposes of applying the formula: P is the Vested percentage
at the relevant time, AB is the account balance at the relevant time,
D is the amount of distribution, and the relevant time is the time at
which, under the Plan, the Vested percentage in the account cannot
increase.
However, the Employer may attach an addendum to the Adoption
Agreement to provide that a separate account shall be established for
the Participant's interest in the Plan as of the time of the
distribution, and at any relevant time the Participant's Vested
portion of the separate account will be equal to an amount determined
as follows: P (AB plus (R x D)) - (R x D) where R is the ratio of the
account balance at the relevant time to the account balance after
distribution and the other terms have the same meaning as in the
preceding paragraph. Any amendment to change the formula in accordance
with the preceding sentence shall not be considered an amendment which
causes this Plan to become an individually designed Plan.
(i) If this is a Plan amendment that eliminates or restricts the
ability of a Participant to receive payment of the Participant's
interest in the Plan under a particular optional form of benefit, then
the amendment shall not apply to any distribution with an annuity
starting date earlier than the earlier of: (i) the 90th day after the
date the Participant receiving the distribution has been furnished a
summary that reflects the amendment and that satisfies the Act
requirements at 29 CFR 2520.104b-3 relating to a summary of material
modifications or (ii) the first day of the second Plan Year following
the Plan Year in which the amendment is adopted.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a Vested
Participant who dies before the Annuity Starting Date and who has a
surviving spouse shall have the Pre-Retirement Survivor Annuity paid
to the surviving spouse. The Participant's spouse may direct that
payment of the Pre-Retirement Survivor Annuity commence within a
reasonable period after the Participant's death. If the spouse does
not so direct, payment of such benefit will commence at the time the
Participant would have attained the later of Normal Retirement Age or
age 62. However, the spouse may elect a later commencement date. Any
distribution to the Participant's spouse shall be subject to the rules
specified in Section 6.6(h).
61
(b) Any election to waive the Pre-Retirement Survivor Annuity
before the Participant's death must be made by the Participant in
writing (or in such other form as permitted by the IRS) during the
election period and shall require the spouse's irrevocable consent in
the same manner provided for in Section 6.5(a)(2). Further, the
spouse's consent must acknowledge the specific nonspouse Beneficiary.
Notwithstanding the foregoing, the nonspouse Beneficiary need not be
acknowledged, provided the consent of the spouse acknowledges that the
spouse has the right to limit consent only to a specific Beneficiary
and that the spouse voluntarily elects to relinquish such right.
(c) The election period to waive the Pre-Retirement Survivor
Annuity shall begin on the first day of the Plan Year in which the
Participant attains age 35 and end on the date of the Participant's
death. An earlier waiver (with spousal consent) may be made provided a
written (or such other form as permitted by the IRS) explanation of
the Pre-Retirement Survivor Annuity is given to the Participant and
such waiver becomes invalid at the beginning of the Plan Year in which
the Participant turns age 35. In the event a Participant separates
from service prior to the beginning of the election period, the
election period shall begin on the date of such separation from
service.
(d) With regard to the election, the Administrator shall provide
each Participant within the applicable election period, with respect
to such Participant (and consistent with Regulations), a written (or
such other form as permitted by the IRS) explanation of the
Pre-Retirement Survivor Annuity containing comparable information to
that required pursuant to Section 6.5(a)(5). For the purposes of this
paragraph, the term "applicable period" means, with respect to a
Participant, whichever of the following periods ends last:
(1) The period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close of
the Plan Year preceding the Plan Year in which the Participant
attains age 35;
(2) A reasonable period after the individual becomes a
Participant;
(3) A reasonable period ending after the Plan no longer fully
subsidizes the cost of the Pre-Retirement Survivor Annuity with
respect to the Participant; or
(4) A reasonable period ending after Code Section 401(a)(11)
applies to the Participant.
For purposes of applying this subsection, a reasonable period
ending after the enumerated events described in (2), (3) and (4) is
the end of the two (2) year period beginning one (1) year prior to the
date the applicable event occurs, and ending one (1) year after that
date. In the case of a Participant who separates from service before
the Plan Year in which age 35 is attained, notice shall be provided
within the two (2) year period beginning one (1) year prior to
separation and ending one (1) year after separation. If such a
Participant thereafter returns to employment with the Employer, the
applicable period for such Participant shall be redetermined.
62
(e) The Pre-Retirement Survivor Annuity provided for in this
Section shall apply only to Participants who are credited with an Hour
of Service on or after August 23, 1984. Former Participants who are
not credited with an Hour of Service on or after August 23, 1984,
shall be provided with rights to the Pre-Retirement Survivor Annuity
in accordance with Section 303(e)(2) of the Retirement Equity Act of
1984.
(f) If the value of the Pre-Retirement Survivor Annuity derived
from Employer and Employee contributions does not exceed, and has
never exceeded at the time of any prior distribution, $5,000 (or,
$3,500 for distributions made prior to the later of the first day of
the first Plan Year beginning after August 5, 1997, or the date
specified in the Adoption Agreement) the Administrator shall direct
the distribution of such amount to the Participant's spouse as soon as
practicable. No distribution may be made under the preceding sentence
after the Annuity Starting Date unless the spouse consents in writing
(or in such other form as permitted by the IRS). If the value exceeds,
or has ever exceeded at the time of any prior distribution, $5,000
(or, if applicable, $3,500), an immediate distribution of the entire
amount may be made to the surviving spouse, provided such surviving
spouse consents in writing (or in such other form as permitted by the
IRS) to such distribution. Any consent required under this paragraph
must be obtained not more than ninety (90) days before commencement of
the distribution and shall be made in a manner consistent with Section
6.5(a)(2). Notwithstanding the preceding, the "lookback rule" (which
provides that if the present value at the time of a prior distribution
exceeded the applicable dollar threshold, then the present value at
any subsequent time is deemed to exceed the threshold) will not apply
to any distributions made on or after October 17, 2000.
(g) Death benefits may be paid to a Participant's Beneficiary in
one of the following optional forms of benefits subject to the rules
specified in Section 6.6(h) and the elections made in the Adoption
Agreement. Such optional forms of distributions may be elected by the
Participant in the event there is an election to waive the
Pre-Retirement Survivor Annuity, and for any death benefits in excess
of the Pre-Retirement Survivor Annuity. However, if no optional form
of distribution was elected by the Participant prior to death, then
the Participant's Beneficiary may elect the form of distribution:
(1) One lump-sum payment in cash or in property that is allocated
to the accounts of the Participant at the time of the
distribution.
(2) Partial withdrawals.
(3) Payment in monthly, quarterly, semi-annual, or annual cash
installments over a period to be determined by the Participant or
the Participant's Beneficiary. In order to provide such
installment payments, the Administrator may (A) segregate the
aggregate amount thereof in a separate, federally insured savings
account, certificate of deposit in a bank or savings and loan
association, money market certificate or other liquid short-term
security or (B) purchase a nontransferable annuity contract for a
term certain (with no life contingencies) providing for such
payment. After periodic installments commence, the Beneficiary
shall have the right to reduce the period over which such
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periodic installments shall be made, and the cash amount of such
periodic installments shall be adjusted accordingly.
(4) In the form of an annuity over the life expectancy of the
Beneficiary.
(5) If death benefits in excess of the Pre-Retirement Survivor
Annuity are to be paid to the surviving spouse, such benefits may
be paid pursuant to (1), (2) or (3) above, or used to purchase an
annuity so as to increase the payments made pursuant to the
Pre-Retirement Survivor Annuity.
(h) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder.
(1) If it is determined, pursuant to Regulations, that the
distribution of a Participant's interest has begun and the
Participant dies before the entire interest has been distributed,
the remaining portion of such interest shall be distributed at
least as rapidly as under the method of distribution elected
pursuant to Section 6.5 as of the date of death.
(2) If a Participant dies before receiving any distributions of
the interest in the Plan or before distributions are deemed to
have begun pursuant to Regulations, then the death benefit shall
be distributed to the Participant's Beneficiaries in accordance
with the following rules subject to the elections made in the
Adoption Agreement and subsections 6.6(h)(3) and 6.6(i) below:
(i) The entire death benefit shall be distributed to the
Participant's Beneficiaries by December 31st of the calendar
year in which the fifth anniversary of the Participant's
death occurs;
(ii) The 5-year distribution requirement of (i) above shall
not apply to any portion of the deceased Participant's
interest which is payable to or for the benefit of a
designated Beneficiary. In such event, such portion shall be
distributed over the life of such designated Beneficiary (or
over a period not extending beyond the life expectancy of
such designated Beneficiary) provided such distribution
begins not later than December 31st of the calendar year
immediately following the calendar year in which the
Participant died (or such later date as may be prescribed by
Regulations);
(iii) However, in the event the Participant's spouse
(determined as of the date of the Participant's death) is
the designated Beneficiary, the provisions of (ii) above
shall apply except that the requirement that distributions
commence within one year of the Participant's death shall
not apply. In lieu thereof, distributions must commence on
or before the later of: (1) December 31st of the calendar
year immediately following the calendar year in which the
Participant died; or (2) December 31st of the calendar year
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in which the Participant would have attained age 70 1/2. If
the surviving spouse dies before distributions to such
spouse begin, then the 5-year distribution requirement of
this Section shall apply as if the spouse was the
Participant.
(3) Notwithstanding subparagraph (2) above, or any elections made
in the Adoption Agreement, if a Participant's death benefits are
to be paid in the form of a Pre-Retirement Survivor Annuity, then
distributions to the Participant's surviving spouse must commence
on or before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant
died; or (2) December 31st of the calendar year in which the
Participant would have attained age 70 1/2.
(i) For purposes of Section 6.6(h)(2), the election by a
designated Beneficiary to be excepted from the 5-year distribution
requirement (if permitted in the Adoption Agreement) must be made no
later than December 31st of the calendar year following the calendar
year of the Participant's death. Except, however, with respect to a
designated Beneficiary who is the Participant's surviving spouse, the
election must be made by the earlier of: (1) December 31st of the
calendar year immediately following the calendar year in which the
Participant died or, if later, December 31st of the calendar year in
which the Participant would have attained age 70 1/2; or (2) December
31st of the calendar year which contains the fifth anniversary of the
date of the Participant's death. An election by a designated
Beneficiary must be in writing (or in such other form as permitted by
the IRS) and shall be irrevocable as of the last day of the election
period stated herein. In the absence of an election by the Participant
or a designated Beneficiary, the 5-year distribution requirement shall
apply.
(j) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse (other than in the case of a
life annuity) shall or shall not be redetermined annually as elected
in the Adoption Agreement and in accordance with Regulations. If the
Participant may elect, pursuant to the Adoption Agreement, to have
life expectancies recalculated, then the election, once made shall be
irrevocable. If no election is made by the time distributions must
commence, then the life expectancy of the Participant and the
Participant's spouse shall not be subject to recalculation. Life
expectancy and joint and last survivor life expectancy shall be
computed using the return multiples in Tables V and VI of Regulation
Section 1.72-9.
(k) For purposes of this Section, any amount paid to a child of
the Participant will be treated as if it had been paid to the
surviving spouse if the amount becomes payable to the surviving spouse
when the child reaches the age of majority.
(l) In the event that less than one hundred percent (100%) of a
Participant's interest in the Plan is distributed to such
Participant's spouse, the portion of the distribution attributable to
the Participant's Voluntary Contribution Account shall be in the same
proportion that the Participant's Voluntary Contribution Account bears
to the Participant's total interest in the Plan.
65
(m) Subject to the spouse's right of consent afforded under the
Plan, the restrictions imposed by this Section shall not apply if a
Participant has, prior to January 1, 1984, made a written designation
to have death benefits paid in an alternative method acceptable under
Code Section 401 (a) as in effect prior to the enactment of the Tax
Equity and Fiscal Responsibility Act of 1982 (TEFRA).
6.7 TIME OF DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever a
distribution is to be made, or a series of payments are to commence,
the distribution or series of payments may be made or begun on such
date or as soon thereafter as is practicable. However, unless a Former
Participant elects in writing to defer the receipt of benefits (such
election may not result in a death benefit that is more than
incidental), the payment of benefits shall begin not later than the
sixtieth (60th) day after the close of the Plan Year in which the
latest of the following events occurs: (a) the date on which the
Participant attains the earlier of age 65 or the Normal Retirement Age
specified herein; (b) the tenth (10th) anniversary of the year in
which the Participant commenced participation in the Plan; or (c) the
date the Participant terminates service with the Employer.
Notwithstanding the foregoing, the failure of a Participant and,
if applicable, the Participant's spouse, to consent to a distribution
that is "immediately distributable" (within the meaning of Section
6.5(d)), shall be deemed to be an election to defer the commencement
of payment of any benefit sufficient to satisfy this Section.
6.8 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY
In the event a distribution is to be made to a minor or
incompetent Beneficiary, then the Administrator may direct that such
distribution be paid to the legal guardian, or if none in the case of
a minor Beneficiary, to a parent of such Beneficiary, or to the
custodian for such Beneficiary under the Uniform Gift to Minors Act or
Gift to Minors Act, if such is permitted by the laws of the state in
which said Beneficiary resides. Such a payment to the legal guardian,
custodian or parent of a minor or incompetent Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on
account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution
payable to a Participant or Beneficiary hereunder shall, at the later
of the Participant's attainment of age 62 or Normal Retirement Age,
remain unpaid solely by reason of the inability of the Administrator,
after sending a registered letter, return receipt requested, to the
last known address, and after further diligent effort, to ascertain
the whereabouts of such Participant or Beneficiary, the amount so
distributable shall be treated as a Forfeiture pursuant to the Plan.
Notwithstanding the foregoing, if the value of a Participant's Vested
benefit derived from Employer and Employee contributions does not
exceed $5,000, then the amount distributable may be treated as a
Forfeiture at the time it is determined that the whereabouts of the
Participant or the Participant's Beneficiary can not be ascertained.
In the event a Participant or Beneficiary is located subsequent to the
Forfeiture, such benefit shall be restored, first from Forfeitures, if
any, and then from an additional Employer contribution, if necessary.
Upon Plan termination, the portion of the distributable amount that is
66
an "eligible rollover distribution" as defined in Plan Section
6.14(b)(1) may be paid directly to an individual retirement account
described in Code Section 408(a) or an individual retirement annuity
described in Code Section 408(b). However, regardless of the
preceding, a benefit that is lost by reason of escheat under
applicable state law is not treated as a Forfeiture for purposes of
this Section nor as an impermissible forfeiture under the Code.
6.10 IN-SERVICE DISTRIBUTION
For Profit Sharing Plans and 401(k) Profit Sharing Plans, if
elected in the Adoption Agreement, at such time as the conditions set
forth in the Adoption Agreement have been satisfied, then the
Administrator, at the election of a Participant who has not severed
employment with the Employer, shall direct the distribution of up to
the entire Vested amount then credited to the accounts as elected in
the Adoption Agreement maintained on behalf of such Participant. In
the event that the Administrator makes such a distribution, the
Participant shall continue to be eligible to participate in the Plan
on the same basis as any other Employee. Any distribution made
pursuant to this Section shall be made in a manner consistent with
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder. Furthermore, if an in-service distribution is permitted
from more than one account type, the Administrator may determine any
ordering of a Participant's in-service distribution from such
accounts.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) For Profit Sharing Plans and 401(k) Plans (except to the
extent Section 12.9 applies), if elected in the Adoption Agreement,
the Administrator, at the election of the Participant, shall direct
the distribution to any Participant in any one Plan Year up to the
lesser of 100% of the Vested interest of the Participant's Combined
Account valued as of the last Valuation Date or the amount necessary
to satisfy the immediate and heavy financial need of the Participant.
Any distribution made pursuant to this Section shall be deemed to be
made as of the first day of the Plan Year or, if later, the Valuation
Date immediately preceding the date of distribution, and the account
from which the distribution is made shall be reduced accordingly.
Withdrawal under this Section shall be authorized only if the
distribution is for an immediate and heavy financial need. The
Administrator will determine whether there is an immediate and heavy
financial need based on the facts and circumstances. An immediate and
heavy financial need includes, but is not limited to, a distribution
for one of the following:
(1) Medical expenses described in Code Section 213(d) incurred by
the Participant, the Participant's spouse, or any of the
Participant's dependents (as defined in Code Section 152) or
necessary for these persons to obtain medical care as described
in Code Section 213(d);
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Funeral expenses for a member of the Participant's family;
67
(4) Payment of tuition, related educational fees, and room and
board expenses, for the next twelve (12) months of post-secondary
education for the Participant, the Participant's spouse,
children, or dependents (as defined in Code Section 152); or
(5) Payments necessary to prevent the eviction of the Participant
from the Participant's principal residence or foreclosure on the
mortgage on that residence.
(b) If elected in the Adoption Agreement, no distribution shall
be made pursuant to this Section from the Participant's Account until
such Account has become fully Vested. Furthermore, if a hardship
distribution is permitted from more than one account type, the
Administrator may determine any ordering of a Participant's hardship
distribution from such accounts.
(c) Any distribution made pursuant to this Section shall be made
in a manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
6.12 SPECIAL RULE FOR CERTAIN PROFIT SHARING PLANS
(a) The provisions of this Section apply to a Participant in a
Profit Sharing Plan or 401(k) Profit Sharing Plan to the extent
elected in the Adoption Agreement.
(b) If an election is made to not offer life annuities as a form
of distribution, then a Participant shall be prohibited from electing
benefits in the form of a life annuity and the Joint and Survivor
Annuity provisions of Section 6.5 shall not apply.
(c) Notwithstanding anything in Sections 6.2 and 6.6 to the
contrary, upon the death of a Participant, the automatic form of
distribution will be a lump-sum rather than a Qualified Pre-Retirement
Survivor Annuity. Furthermore, the Participant's spouse will be the
Beneficiary of the Participant's entire Vested interest in the Plan
unless an election is made to waive the spouse as Beneficiary. The
other provisions in Section 6.2 shall be applied by treating the death
benefit in this subsection as though it is a Qualified Pre-Retirement
Survivor Annuity.
(d) Except to the extent otherwise provided in this Section, the
provisions of Sections 6.2, 6.5 and 6.6 regarding spousal consent
shall be inoperative with respect to this Plan.
(e) If a distribution is one to which Code Sections 401(a)(11)
and 417 do not apply, such distribution may commence less than thirty
(30) days after the notice required under Regulation 1.411(a)-I I(c)
is given, provided that:
(1) the Plan Administrator clearly informs the Participant that
the Participant has a right to a period of at least thirty (30)
days after the notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a particular
distribution option), and
68
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
6.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to
any "alternate payee" under a "qualified domestic relations order."
Furthermore, a distribution to an "alternate payee" shall be permitted
if such distribution is authorized by a "qualified domestic relations
order," even if the affected Participant has not reached the "earliest
retirement age" under the Plan. For the purposes of this Section,
"alternate payee," "qualified domestic relations order" and "earliest
retirement age" shall have the meanings set forth under Code Section
414(p).
6.14 DIRECT ROLLOVERS
(a) Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a "distributee's" election under this
Section, a "distributee" may elect, at the time and in the manner
prescribed by the Administrator, to have any portion of an "eligible
rollover distribution" that is equal to at least $500 paid directly to
an "eligible retirement plan" specified by the "distributee" in a
"direct rollover."
(b) For purposes of this Section, the following definitions shall
apply:
(1) An "eligible rollover distribution" means any distribution
described in Code Section 402(c)(4) and generally includes any
distribution of all or any portion of the balance to the credit
of the distributee, except that an "eligible rollover
distribution" does not include: any distribution that is one of a
series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy)
of the "distributee" or the joint lives (or joint life
expectancies) of the "distributee" and the "distributee's"
designated beneficiary, or for a specified period of ten (10)
years or more; any distribution to the extent such distribution
is required under Code Section 401 (a)(9); the portion of any
other distribution(s) that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); for
distributions made after December 31, 1998, any hardship
distribution described in Code Section 40 1 (k)(2)(B)(i)(IV); and
any other distribution reasonably expected to total less than
$200 during a year.
(2) An "eligible retirement plan" is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity
plan described in Code Section 403(a), or a qualified plan
described in Code Section 401(a), that accepts the
"distributee's" "eligible rollover distribution." However, in the
case of an "eligible rollover distribution" to the surviving
spouse, an "eligible retirement plan" is an individual retirement
account or individual retirement annuity.
(3) A "distributee" includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse
69
who is the alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are distributees with
regard to the interest of the spouse or former spouse.
(4) A "direct rollover" is a payment by the Plan to the "eligible
retirement plan" specified by the "distributee."
6.15 TRANSFER OF ASSETS FROM A MONEY PURCHASE PLAN
(a) This Section shall be effective as of the following date:
(1) for Plans not entitled to extended reliance as described in
Revenue Ruling 94-76, the first day of the first Plan Year
beginning on or after December 12, 1994, or if later, 90 days
after December 12, 1994; or
(2) for Plans entitled to extended reliance as described in
Revenue Ruling 94-76, as of the first day of the first Plan Year
following the Plan Year in which the extended reliance period
applicable to the Plan ends. However, in the event of a transfer
of assets to the Plan from a money purchase plan that occurs
after the date of the most recent determination letter, the
effective date of the amendment shall be the date immediately
preceding the date of such transfer of assets.
(b) Notwithstanding any provision of this Plan to the contrary,
to the extent that any optional form of benefit under this Plan
permits a distribution prior to the Employee's retirement, death,
disability, or severance from employment, and prior to Plan
termination, the optional form of benefit is not available with
respect to benefits attributable to assets (including the
post-transfer earnings thereon) and liabilities that are transferred,
within the meaning of Code Section 414(1), to this Plan from a money
purchase pension plan qualified under Code Section 401 (a) (other than
any portion of those assets and liabilities attributable to after-tax
voluntary Employee contributions or to a direct or indirect rollover
contribution).
6.16 ELECTIVE TRANSFERS OF BENEFITS TO OTHER PLANS
(a) If a voluntary, fully-informed election is made by a
Participant, then if the conditions set forth herein are satisfied, a
Participant's entire benefit may be transferred between qualified
plans (other than any direct rollover described in Q&A-3 of Regulation
1.401(a)(31)-I ). As an alternative to the transfer, the Participant
may elect to retain the Participant's "Section 411(d)(6) protected
benefits" under the Plan (or, if the plan is terminating, to receive
any optional form of benefit for which the Participant is eligible
under the plan as required by Code Section 411(d)(6)). A transfer
between qualified plans may only be made pursuant to this subsection
if the following additional requirements are met:
(i) The transfer occurs at a time at which the participant's
benefits are distributable. A Participant's benefits are
distributable on a particular date if, on that date, the
Participant is eligible, under the terms of the Plan, to
receive an immediate distribution of these benefits (e.g.,
in the form of an immediately commencing annuity) from that
70
plan under provisions of the plan not inconsistent with Code
Section 401(a);
(ii) For transfers that occur on or after January 1, 2002,
the transfer occurs at a time at which the Participant is
not eligible to receive an immediate distribution of the
participant's entire nonforfeitable accrued benefit in a
single-sum distribution that would consist entirely of an
eligible rollover distribution within the meaning of Code
Section 401(a)(3 1)(C);
(iii) The participant is fully Vested in the transferred
benefit in the transferee plan;
(iv) In the case of a transfer from a defined contribution
plan to a defined benefit plan, the defined benefit plan
provides a minimum benefit, for each Participant whose
benefits are transferred, equal to the benefit, expressed as
an annuity payable at normal retirement age, that is derived
solely on the basis of the amount transferred with respect
to such Participant; and
(v) The amount of the benefit transferred, together with the
amount of any contemporaneous Code Section 401(a)(3I) direct
rollover to the transferee plan, equals the Participant's
entire nonforfeitable accrued benefit under the Plan.
(b) If a voluntary, fully-informed election is made by a
Participant, then if the conditions set forth herein are satisfied, a
Participant's entire benefit may be transferred between qualified
defined contribution plans (other than any direct rollover described
in Q&A-3 of Regulation 1.401(a)(31)-1). As an alternative to the
transfer, the Participant may elect to retain the Participant's
"Section 411(d)(6) protected benefits" under the Plan (or, if the plan
is terminating, to receive any optional form of benefit for which the
Participant is eligible under the plan as required by Code Section
411(d)(6)). A transfer between qualified plans may only be made
pursuant to this subsection if the following additional requirements
are met:
(i) To the extent the benefits are transferred from a money
purchase pension plan, the transferee plan must be a money
purchase pension plan. To the extent the benefits being
transferred are part of a qualified cash or deferred
arrangement under Code Section 401(k), the benefits must be
transferred to a qualified cash or deferred arrangement
under Code Section 401(k). Benefits transferred from a
profit-sharing plan other than from a qualified cash or
deferred arrangement, or from a stock bonus plan other than
an employee stock ownership plan, may be transferred to any
type of defined contribution plan; and
(ii) The transfer must be made either in connection with an
asset or stock acquisition, merger, or other similar
transaction involving a change in employer of the employees
71
of a trade or business (i.e., an acquisition or disposition
within the meaning of Regulation 1.410(b)-2(t)) or in
connection with the Participant's change in employment
status to an employment status with respect to which the
Participant is not entitled to additional allocations under
the Plan.
ARTICLE VII
TRUSTEE AND CUSTODIAN
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The provisions of this Article, other than Section 7.6, shall
not apply to this Plan if a separate trust agreement is being used as
specified in the Adoption Agreement.
(b) The Trustee is accountable to the Employer for the funds
contributed to the Plan by the Employer, but the Trustee does not have
any duty to see that the contributions received comply with the
provisions of the Plan. The Trustee is not obligated to collect any
contributions from the Employer, nor is it under a duty to see that
funds deposited with it are deposited in accordance with the
provisions of the Plan.
(c) The Trustee will credit and distribute the Trust Fund as
directed by the Administrator. The Trustee is not obligated to inquire
as to whether any payee or distributee is entitled to any payment or
whether the distribution is proper or within the terms of the Plan, or
whether the manner of making any payment or distribution is proper.
The Trustee is accountable only to the Administrator for any payment
or distribution made by it in good faith on the order or direction of
the Administrator.
(d) In the event that the Trustee shall be directed by a
Participant (pursuant to the Participant Direction Procedures if the
Plan permits Participant directed investments), the Employer, or an
Investment Manager or other agent appointed by the Employer with
respect to the investment of any or all Plan assets, the Trustee shall
have no liability with respect to the investment of such assets, but
shall be responsible only to execute such investment instructions as
so directed.
(1) The Trustee shall be entitled to rely fully on the written
(or other form acceptable to the Administrator and the Trustee,
including but not limited to, voice recorded) instructions of a
Participant (pursuant to the Participant Direction Procedures),
the Employer, or any Fiduciary or nonfiduciary agent of the
Employer, in the discharge of such duties, and shall not be
liable for any loss or other liability resulting from such
direction (or lack of direction) of the investment of any part of
the Plan assets.
(2) The Trustee may delegate the duty of executing such
instructions to any nonfiduciary agent, which may be an affiliate
of the Trustee or any Plan representative.
72
(3) The Trustee may refuse to comply with any direction from the
Participant in the event the Trustee, in its sole and absolute
discretion, deems such direction improper by virtue of applicable
law. The Trustee shall not be responsible or liable for any loss
or expense that may result from the Trustee's refusal or failure
to comply with any direction from the Participant.
(4) Any costs and expenses related to compliance with the
Participant's directions shall be borne by the Participant's
Directed Account, unless paid by the Employer.
(5) Notwithstanding anything herein above to the contrary, the
Trustee shall not invest any portion of a Participant's Directed
Account in "collectibles" within the meaning of Code Section
408(m).
(e) The Trustee will maintain records of receipts and
disbursements and furnish to the Employer and/or Administrator for
each Plan Year a written annual report pursuant to Section 7.9.
(f) The Trustee may employ a bank or trust company pursuant to
the terms of its usual and customary bank agency agreement, under
which the duties of such bank or trust company shall be of a
custodial, clerical and record-keeping nature.
(g) The Trustee may employ and pay from the Trust Fund reasonable
compensation to agents, attorneys, accountants and other persons to
advise the Trustee as in its opinion may be necessary. The Trustee may
delegate to any agent, attorney, accountant or other person selected
by it any non-Trustee power or duty vested in it by the Plan, and the
Trustee may act or refrain from acting on the advice or opinion of any
such person.
7.2 INVESTMENT POWERS AND DUTIES OF DISCRETIONARY TRUSTEE
(a) This Section applies if the Employer, in the Adoption
Agreement or as otherwise agreed upon by the Employer and the Trustee,
designates the Trustee to administer all or a portion of the trust as
a discretionary Trustee. If so designated, then the Trustee has the
discretion and authority to invest, manage, and control those Plan
assets except, however, with respect to those assets which are subject
to the investment direction of a Participant (if Participant directed
investments are permitted), or an Investment Manager, the
Administrator, or other agent appointed by the Employer. The exercise
of any investment discretion hereunder shall be consistent with the
"funding policy and method" determined by the Employer.
(b) The Trustee shall, except as otherwise provided in this Plan,
invest and reinvest the Trust Fund to keep the Trust Fund invested
without distinction between principal and income and in such
securities or property, real or personal, wherever situated, as the
Trustee shall deem advisable, including, but not limited to, common or
preferred stocks, open-end or closed-end mutual funds, bonds and other
evidences of indebtedness or ownership, and real estate or any
interest therein. The Trustee shall at all times in making investments
73
of the Trust Fund consider, among other factors, the short and
long-term financial needs of the Plan on the basis of information
furnished by the Employer. In making such investments, the Trustee
shall not be restricted to securities or other property of the
character expressly authorized by the applicable law for trust
investments; however, the Trustee shall give due regard to any
limitations imposed by the Code or the Act so that at all times this
Plan may qualify as a qualified Plan and Trust.
(c) The Trustee, in addition to all powers and authorities under
common law, statutory authority, including the Act, and other
provisions of this Plan, shall have the following powers and
authorities to be exercised in the Trustee's sole discretion:
(1) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the purchase
of securities, margin accounts may be opened and maintained;
(2) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other
property held by the Trustee, by private contract or at public
auction. No person dealing with the Trustee shall be bound to see
to the application of the purchase money or to inquire into the
validity, expediency, or propriety of any such sale or other
disposition, with or without advertisement;
(3) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without
power of substitution; to exercise any conversion privileges,
subscription rights or other options, and to make any payments
incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes
affecting corporate securities, and to delegate discretionary
powers, and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an
owner with respect to stocks, bonds, securities, or other
property. However, the Trustee shall not vote proxies relating to
securities for which it has not been assigned full investment
management responsibilities. In those cases where another party
has such investment authority or discretion, the Trustee will
deliver all proxies to said party who will then have full
responsibility for voting those proxies;
(4) To cause any securities or other property to be registered in
the Trustee's own name, in the name of one or more of the
Trustee's nominees, in a clearing corporation, in a depository,
or in book entry form or in bearer form, but the books and
records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
(5) To invest in a common, collective, or pooled trust fund (the
provisions of which are incorporated herein by reference)
maintained by any Trustee (or any affiliate of such Trustee)
hereunder pursuant to Revenue Ruling 81-100, all or such part of
the Trust Fund as the Trustee may deem advisable, and the part of
the Trust Fund so transferred shall be subject to all the terms
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and provisions of the common, collective, or pooled trust fund
which contemplate the commingling for investment purposes of such
trust assets with trust assets of other trusts. The name of the
trust fund may be specified in an addendum to the Adoption
Agreement. The Trustee may withdraw from such common, collective,
or pooled trust fund all or such part of the Trust Fund as the
Trustee may deem advisable;
(6) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall
deem advisable; and for any sum so borrowed, to issue a
promissory note as Trustee, and to secure the repayment thereof
by pledging all, or any part, of the Trust Fund; and no person
lending money to the Trustee shall be bound to see to the
application of the money lent or to inquire into the validity,
expediency, or propriety of any borrowing;
(7) To accept and retain for such time as it may deem advisable
any securities or other property received or acquired by it as
Trustee hereunder, whether or not such securities or other
property would normally be purchased as investments hereunder;
(8) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out the
powers herein granted;
(9) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence
or defend suits or legal or administrative proceedings, and to
represent the Plan in all suits and legal and administrative
proceedings;
(10) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agents or counsel
may or may not be an agent or counsel for the Employer;
(11) To apply for and procure from the Insurer as an investment
of the Trust Fund any annuity or other Contracts (on the life of
any Participant, or in the case of a Profit Sharing Plan
(including a 401(k) plan), on the life of any person in whom a
Participant has an insurable interest, or on the joint lives of a
Participant and any person in whom the Participant has an
insurable interest) as the Administrator shall deem proper; to
exercise, at any time or from time to time, whatever rights and
privileges may be granted under such annuity, or other Contracts;
to collect, receive, and settle for the proceeds of all such
annuity, or other Contracts as and when entitled to do so under
the provisions thereof;
(12) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest or in cash or cash
balances without liability for interest thereon, including the
specific authority to invest in any type of deposit of the
Trustee (or of a financial institution related to the Trustee);
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(13) To invest in Treasury Bills and other forms of United States
government obligations;
(14) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national securities
exchange registered under the Securities Exchange Act of 1934, as
amended, or, if the options are not traded on a national
securities exchange, are guaranteed by a member firm of the New
York Stock Exchange regardless of whether such options are
covered;
(15) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations
including the specific authority to make deposit into any savings
accounts or certificates of deposit of the Trustee (or a
financial institution related to the Trustee);
(16) To pool all or any of the Trust Fund, from time to time,
with assets belonging to any other qualified employee pension
benefit trust created by the Employer or any Affiliated Employer,
and to commingle such assets and make joint or common investments
and carry joint accounts on behalf of this Plan and Trust and
such other trust or trusts, allocating undivided shares or
interests in such investments or accounts or any pooled assets of
the two or more trusts in accordance with their respective
interests; and
(17) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the
Trustee may deem necessary to carry out the purposes of the Plan.
7.3 INVESTMENT POWERS AND DUTIES OF NONDISCRETIONARY TRUSTEE
(a) This Section applies if the Employer, in the Adoption
Agreement or as otherwise agreed upon by the Employer and the Trustee,
designates the Trustee to administer all or a portion of the trust as
a nondiscretionary Trustee. If so designated, then the Trustee shall
have no discretionary authority to invest, manage, or control those
Plan assets, but must act solely as a directed Trustee of those Plan
assets. A nondiscretionary Trustee, as directed Trustee of the Plan
funds it holds, is authorized and empowered, by way of limitation,
with the powers, rights and duties set forth herein and in Section
7.14, each of which the nondiscretionary Trustee exercises solely as
directed Trustee in accordance with the direction of the party which
has the authority to manage and control the investment of the Plan
assets. If no directions are provided to the Trustee, the Employer
will provide necessary direction. Furthermore, the Employer and the
nondiscretionary Trustee may, in writing, limit the powers of the
nondiscretionary Trustee to any combination of powers listed within
this Section.
(b) The Trustee, in addition to all powers and authorities under
common law, statutory authority, including the Act, and other
provisions of this Plan, shall have the following powers and
authorities:
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(1) To invest the assets, without distinction between principal
and income, in securities or property, real or personal, wherever
situated, including, but not limited to, common or preferred
stocks, open-end or closed-end mutual funds, bonds and other
evidences of indebtedness or ownership, and real estate or any
interest therein. In making such investments, the Trustee shall
not be restricted to securities or other property of the
character expressly authorized by the applicable law for trust
investments; however, the Trustee shall give due regard to any
limitations imposed by the Code or the Act so that at all times
this Plan may qualify as a qualified Plan and Trust.
(2) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the purchase
of securities, margin accounts may be opened and maintained;
(3) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other
property held by the Trustee, by private contract or at public
auction. No person dealing with the Trustee shall be bound to see
to the application of the purchase money or to inquire into the
validity, expediency, or propriety of any such sale or other
disposition, with or without advertisement;
(4) At the direction of the party which has the authority or
discretion, to vote upon any stocks, bonds, or other securities;
to give general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion
privileges, subscription rights or other options, and to make any
payments incidental thereto; to oppose, or to consent to, or
otherwise participate in, corporate reorganizations or other
changes affecting corporate securities, and to delegate powers,
and pay any assessments or charges in connection therewith; and
generally to exercise any of the powers of an owner with respect
to stocks, bonds, securities, or other property;
(5) To cause any securities or other property to be registered in
the Trustee's own name, in the name of one or more of the
Trustee's nominees, in a clearing corporation, in a depository,
or in book entry form or in bearer form, but the books and
records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
(6) To invest in a common, collective, or pooled trust fund (the
provisions of which are incorporated herein by reference)
maintained by any Trustee (or any affiliate of such Trustee)
hereunder pursuant to Revenue Ruling 81-100, all or such part of
the Trust Fund as the party which has the authority to manage and
control the investment of the assets shall deem advisable, and
the part of the Trust Fund so transferred shall be subject to all
the terms and provisions of the common, collective, or pooled
trust fund which contemplate the commingling for investment
purposes of such trust assets with trust assets of other trusts.
The name of the trust fund may be specified in an addendum to the
Adoption Agreement;
77
(7) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall
deem advisable; and for any sum so borrowed, to issue a
promissory note as Trustee, and to secure the repayment thereof
by pledging all, or any part, of the Trust Fund; and no person
lending money to the Trustee shall be bound to see to the
application of the money lent or to inquire into the validity,
expediency, or propriety of any borrowing;
(8) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out the
powers herein granted;
(9) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence
or defend suits or legal or administrative proceedings, and to
represent the Plan in all suits and legal and administrative
proceedings;
(10) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or counsel
may or may not be an agent or counsel for the Employer;
(11) To apply for and procure from the Insurer as an investment
of the Trust Fund any annuity or other Contracts (on the life of
any Participant, or in the case of a Profit Sharing Plan
(including a 401(k) plan), on the life of any person in whom a
Participant has an insurable interest, or on the joint lives of a
Participant and any person in whom the Participant has an
insurable interest) as the Administrator shall deem proper; to
exercise, at the direction of the person with the authority to do
so, whatever rights and privileges may be granted under such
annuity or other Contracts; to collect, receive, and settle for
the proceeds of all such annuity or other Contracts as and when
entitled to do so under the provisions thereof;
(12) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest or in cash or cash
balances without liability for interest thereon, including the
specific authority to invest in any type of deposit of the
Trustee (or of a financial institution related to the Trustee);
(13) To invest in Treasury Bills and other forms of United States
government obligations;
(14) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national securities
exchange registered under the Securities Exchange Act of 1934, as
amended, or, if the options are not traded on a national
securities exchange, are guaranteed by a member firm of the New
York Stock Exchange regardless of whether such options are
covered;
(15) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations
including the specific authority to make deposit into any savings
78
accounts or certificates of deposit of the Trustee (or a
financial institution related to the Trustee); and
(16) To pool all or any of the Trust Fund, from time to time,
with assets belonging to any other qualified employee pension
benefit trust created by the Employer or any Affiliated Employer,
and to commingle such assets and make joint or common investments
and carry joint accounts on behalf of this Plan and such other
trust or trusts, allocating undivided shares or interests in such
investments or accounts or any pooled assets of the two or more
trusts in accordance with their respective interests.
7.4 POWERS AND DUTIES OF CUSTODIAN
If there is a discretionary Trustee, the Employer may appoint a
custodian. A custodian has the same powers, rights and duties as a
nondiscretionary Trustee. Any reference in the Plan to a Trustee also is a
reference to a custodian unless the context of the Plan indicates otherwise. A
limitation of the Trustee's liability by Plan provision also acts as a
limitation of the custodian's liability. Any action taken by the custodian at
the discretionary Trustee's direction satisfies any provision in the Plan
referring to the Trustee taking that action. The resignation or removal of the
custodian shall be made in accordance with Section 7.11 as though the custodian
were a Trustee.
7.5 LIFE INSURANCE
(a) The Trustee, at the direction of the Administrator and
pursuant to instructions from the individual designated in the
Adoption Agreement for such purpose and subject to the conditions set
forth in the Adoption Agreement, shall ratably apply for, own, and pay
all premiums on Contracts on the lives of the Participants or, in the
case of Profit Sharing Plan (including a 401(k) plan), on the life of
any person in whom the Participant has an insurable interest or on the
joint lives of a Participant and any person in whom the Participant
has an insurable interest. Any initial or additional Contract
purchased on behalf of a Participant shall have a face amount of not
less than $1,000, the amount set forth in the Adoption Agreement, or
the limitation of the Insurer, whichever is greater. If a life
insurance Contract is to be purchased for a Participant or Former
Participant, then the aggregate premium for ordinary life insurance
for each Participant or Former Participant must be less than 50% of
the aggregate contributions and Forfeitures allocated to the
Participant's or Former Participant's Combined Account. For purposes
of this limitation, ordinary life insurance Contracts are Contracts
with both non-decreasing death benefits and non-increasing premiums.
If term insurance or universal life insurance is purchased, then the
aggregate premium must be 25% or less of the aggregate contributions
and Forfeitures allocated to the Participant's or Former Participant's
Combined Account. If both term insurance and ordinary life insurance
are purchased, then the premium for term insurance plus one-half of
the premium for ordinary life insurance may not in the aggregate
exceed 25% of the aggregate Employer contributions and Forfeitures
allocated to the Participant's or Former Participant's Combined
Account. Notwithstanding the preceding, the limitations imposed herein
with respect to the purchase of life insurance shall not apply, in the
case of a Profit Sharing Plan (including a 401(k) plan), to the
portion of the Participant's Account that has accumulated for at least
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two (2) Plan Years or to the entire Participant's Account if the
Participant has been a Participant in the Plan for at least five (5)
years. Amounts transferred to this Plan in accordance with Section
4.6(e)(ii), (iii) or (v) and a Participant's or Former Participant's
Voluntary Contribution Account may be used to purchase Contracts
without limitation.
(b) The Trustee must distribute the Contracts to the Participant
or Former Participant or convert the entire value of the Contracts at
or before retirement into cash or provide for a periodic income so
that no portion of such value may be used to continue life insurance
protection beyond commencement of benefits. Furthermore, if a Contract
is purchased on the joint lives of the Participant and another person
and such other person predeceases the Participant, then the Contract
may not be maintained under this Plan.
(c) Notwithstanding anything herein above to the contrary,
amounts credited to a Participant's Qualified Voluntary Employee
Contribution Account pursuant to Section 4.9, shall not be applied to
the purchase of life insurance Contracts. Furthermore, no life
insurance Contracts shall be required to be obtained on an
individual's life if, for any reason (other than the nonpayment of
premiums) the Insurer will not issue a Contract on such individual's
life.
(d) The Trustee will be the owner of any life insurance Contract
purchased under the terms of this Plan. The Contract must provide that
the proceeds will be payable to the Trustee; however, the Trustee
shall be required to pay over all proceeds of the Contract to the
Participant's designated Beneficiary in accordance with the
distribution provisions of Article VI. A Participant's spouse will be
the designated Beneficiary pursuant to Section 6.2, unless a qualified
election has been made in accordance with Sections 6.5 and 6.6 of the
Plan, if applicable. Under no circumstances shall the Trust retain any
part of the proceeds that are in excess of the cash surrender value
immediately prior to death. However, the Trustee shall not pay the
proceeds in a method that would violate the requirements of the
Retirement Equity Act of 1984, as stated in Article VI of the Plan, or
Code Section 401(a)(9) and the Regulations thereunder. In the event of
any conflict between the terms of this Plan and the terms of any
insurance Contract purchased hereunder, the Plan provisions shall
control.
7.6 LOANS TO PARTICIPANTS
(a) If specified in the Adoption Agreement, the Trustee (or the
Administrator if the Trustee is a nondiscretionary Trustee or if loans
are treated as Participant directed investments pursuant to the
Adoption Agreement) may, in the Trustee's (or, if applicable, the
Administrator's) sole discretion, make loans to Participants or
Beneficiaries under the following circumstances: (1) loans shall be
made available to all Participants and Beneficiaries on a reasonably
equivalent basis; (2) loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount made
available to other Participants; (3) loans shall bear a reasonable
rate of interest; (4) loans shall be adequately secured; and (5) loans
shall provide for periodic repayment over a reasonable period of time.
Furthermore, no Participant loan shall exceed the Participant's Vested
interest in the Plan.
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(b) Loans shall not be made to any Shareholder-Employee or
Owner-Employee (including an Owner Employee's family members as
defined in Code Section 267(c)(4)) unless an exemption for such loan
is obtained pursuant to Act Section 408 or such loan would otherwise
not be a prohibited transaction pursuant to Code Section 4975 and Act
Section 408.
(c) An assignment or pledge of any portion of a Participant's
interest in the Plan and a loan, pledge, or assignment with respect to
any insurance Contract purchased under the Plan, shall be treated as a
loan under this Section.
(d) If the Vested interest of a Participant is used to secure any
loan made pursuant to this Section, then the written (or such other
form as permitted by the IRS) consent of the Participant's spouse
shall be required in a manner consistent with Section 6.5(a), provided
the spousal consent requirements of such Section apply to the Plan.
Such consent must be obtained within the 90-day period prior to the
date the loan is made. Any security interest held by the Plan by
reason of an outstanding loan to the Participant or Former Participant
shall be taken into account in determining the amount of the death
benefit or Pre-Retirement Survivor Annuity. However, unless the loan
program established pursuant to this Section provides otherwise, no
spousal consent shall be required under this paragraph if the total
interest subject to the security is not in excess of $5,000 (or,
$3,500 effective for loans made prior to the later of the first day of
the first Plan Year beginning after August 5, 1997, or the date
specified in the Adoption Agreement).
(e) The Administrator shall be authorized to establish a
participant loan program to provide for loans under the Plan. The loan
program shall be established in accordance with Department of Labor
Regulation Section 2550.408(b)-1(d)(2) providing for loans by the Plan
to parties-in-interest under said Plan, such as Participants or
Beneficiaries. In order for the Administrator to implement such loan
program, a separate written document forming a part of this Plan must
be adopted, which document shall specifically include, but need not be
limited to, the following:
(1) the identity of the person or positions authorized to
administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans
offered;
(5) the procedure under the program for determining a reasonable
rate of interest;
(6) the types of collateral which may secure a Participant loan;
and
(7) the events constituting default and the steps that will be
taken to preserve Plan assets in the event such default.
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(f) Notwithstanding anything in this Plan to the contrary, if a
Participant or Beneficiary defaults on a loan made pursuant to this
Section that is secured by the Participant's interest in the Plan,
then a Participant's interest may be offset by the amount subject to
the security to the extent there is a distributable event permitted by
the Code or Regulations.
(g) Notwithstanding anything in this Section to the contrary, if
this is an amendment and restatement of an existing Plan, any loans
made prior to the date this amendment and restatement is adopted shall
be subject to the terms of the Plan in effect at the time such loan
was made.
7.7 MAJORITY ACTIONS
Except where there has been an allocation and delegation of powers,
if there shall be more than one Trustee, they shall act by a majority of their
number, but may authorize one or more of them to sign papers on their behalf.
7.8 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set forth
in the Trustee's fee schedule (if the Trustee has such a schedule) or as agreed
upon in writing by the Employer and the Trustee. However, an individual serving
as Trustee who already receives full-time compensation from the Employer shall
not receive compensation from this Plan. In addition, the Trustee shall be
reimbursed for any reasonable expenses, including reasonable counsel fees
incurred by it as Trustee. Such compensation and expenses shall be paid from the
Trust Fund unless paid or advanced by the Employer. All taxes of any kind
whatsoever that may be levied or assessed under existing or future laws upon, or
in respect of, the Trust Fund or the income thereof, shall be paid from the
Trust Fund.
7.9 ANNUAL REPORT OF THE TRUSTEE
(a) Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer's contribution for each
Plan Year, the Trustee, or its agent, shall furnish to the Employer
and Administrator a written statement of account with respect to the
Plan Year for which such contribution was made setting forth:
(1) the net income, or loss, of the Trust Fund;
(2) the gains, or losses, realized by the Trust Fund upon sales
or other disposition of the assets;
(3) the increase, or decrease, in the value of the Trust Fund;
(4) all payments and distributions made from the Trust Fund; and
(5) such further information as the Trustee and/or Administrator
deems appropriate.
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(b) The Employer, promptly upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and
advise the Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such statement of
account within thirty (30) days after its receipt thereof shall be
deemed an approval thereof. The approval by the Employer of any
statement of account shall be binding on the Employer and the Trustee
as to all matters contained in the statement to the same extent as if
the account of the Trustee had been settled by judgment or decree in
an action for a judicial settlement of its account in a court of
competent jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were parties.
However, nothing contained in this Section shall deprive the Trustee
of its right to have its accounts judicially settled if the Trustee so
desires.
7.10 AUDIT
(a) If an audit of the Plan's records shall be required by the
Act and the regulations thereunder for any Plan Year, the
Administrator shall engage on behalf of all Participants an
independent qualified public accountant for that purpose. Such
accountant shall, after an audit of the books and records of the Plan
in accordance with generally accepted auditing standards, within a
reasonable period after the close of the Plan Year, furnish to the
Administrator and the Trustee a report of the audit setting forth the
accountant's opinion as to whether any statements, schedules or lists,
that are required by Act Section 103 or the Secretary of Labor to be
filed with the Plan's annual report, are presented fairly in
conformity with generally accepted accounting principles applied
consistently.
(b) All auditing and accounting fees shall be an expense of and
may, at the election of the Employer, be paid from the Trust Fund.
(c) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated, supervised, and
subject to periodic examination by a state or federal agency, then it
shall transmit and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one hundred
twenty (120) days after the end of the Plan Year or such other date as
may be prescribed under regulations of the Secretary of Labor.
7.11 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) Unless otherwise agreed to by both the Trustee and the
Employer, a Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a
written notice of resignation.
(b) Unless otherwise agreed to by both the Trustee and the
Employer, the Employer may remove a Trustee at any time by delivering
to the Trustee, at least thirty (30) days before its effective date, a
written notice of such Trustee's removal.
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(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such
successor, upon accepting such appointment in writing and delivering
same to the Employer, shall, without further act, become vested with
all the powers and responsibilities of the predecessor as if such
successor had been originally named as a Trustee herein. Until such a
successor is appointed, any remaining Trustee or Trustees shall have
full authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to
the death, resignation, incapacity, or removal of a Trustee. In the
event a successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the powers and responsibilities of the predecessor as if such
successor had been originally named as Trustee herein immediately upon
the death, resignation, incapacity, or removal of the predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, the
Trustee shall furnish to the Employer and Administrator a written
statement of account with respect to the portion of the Plan Year
during which the individual or entity served as Trustee. This
statement shall be either (i) included as part of the annual statement
of account for the Plan Year required under Section 7.9 or (ii) set
forth in a special statement. Any such special statement of account
should be rendered to the Employer no later than the due date of the
annual statement of account for the Plan Year. The procedures set
forth in Section 7.9 for the approval by the Employer of annual
statements of account shall apply to any special statement of account
rendered hereunder and approval by the Employer of any such special
statement in the manner provided in Section 7.9 shall have the same
effect upon the statement as the Employer's approval of an annual
statement of account. No successor to the Trustee shall have any duty
or responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account required by
Section 7.9 and this subparagraph.
7.12 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the
Trustee at the direction of the Administrator shall transfer the interest, if
any, of a Participant to another trust forming part of a pension, profit
sharing, or stock bonus plan that meets the requirements of Code Section 401(a),
provided that the trust to which such transfers are made permits the transfer to
be made.
7.13 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and hold harmless the Trustee
against any and all claims, losses, damages, expenses and liabilities the
Trustee may incur in the exercise and performance of the Trustee's powers and
duties hereunder, unless the same are determined to be due to gross negligence
or willful misconduct.
7.14 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold "qualifying
Employer securities" and "qualifying Employer real property," as those terms are
defined in the Act. However, no more than one hundred percent (100%), in the
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case of a Profit Sharing Plan or 401(k) Plan, or ten percent (10%), in the case
of a Money Purchase Plan, of the fair market value of all the assets in the
Trust Fund may be invested in "qualifying Employer securities" and "qualifying
Employer real property."
Notwithstanding the preceding, for Plan Years beginning after
December 31, 1998, if the Plan does not permit Participants to direct the
investment of their Participants' Elective Deferral Accounts, then the Trustee
shall only be permitted to acquire or hold "qualifying Employer securities" and
"qualifying Employer real property" to the extent permitted under Act Section
407.
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend this
Plan subject to the limitations of this Section. However, any
amendment that affects the rights, duties or responsibilities of the
Trustee or Administrator may only be made with the Trustee's or
Administrator's written consent. Any such amendment shall become
effective as provided therein upon its execution. The Trustee shall
not be required to execute any such amendment unless the amendment
affects the duties of the Trustee hereunder.
(b) The Employer may (1) change the choice of options in the
Adoption Agreement, (2) add any addendum to the Adoption Agreement
that is specifically permitted pursuant to the terms of the Plan; (3)
add overriding language to the Adoption Agreement when such language
is necessary to satisfy Code Sections 415 or 416 because of the
required aggregation of multiple plans, and (4) add certain model
amendments published by the Internal Revenue Service which
specifically provide that their adoption will not cause the Plan to be
treated as an individually designed plan. An Employer that amends the
Plan for any other reason, including a waiver of the minimum funding
requirement under Code Section 412(d), will no longer participate in
this Prototype Plan and this Plan will be considered to be an
individually designed plan. Notwithstanding the preceding, the
attachment to the Adoption Agreement of any addendum specifically
authorized by the Plan or a list of any "Section 411 (d)(6) protected
benefits" which must be preserved shall not be considered an amendment
to the Plan.
(c) The Employer expressly delegates authority to the sponsor of
this Prototype Plan, the right to amend each Employer's Plan by
submitting a copy of the amendment to each Employer who has adopted
this Prototype Plan, after first having received a ruling or favorable
determination from the Internal Revenue Service that the Prototype
Plan as amended qualifies under Code Section 401 (a) and the Act
(unless a ruling or determination is not required by the IRS). For
purposes of this Section, the mass submitter shall be recognized as
the agent of the sponsor. If the sponsor does not adopt any amendment
made by the mass submitter, it will no longer be identical to, or a
minor modifier of, the mass submitter plan.
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(d) No amendment to the Plan shall be effective if it authorizes
or permits any part of the Trust Fund (other than such part as is
required to pay taxes and administration expenses) to be used for or
diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any
reduction in the amount credited to the account of any Participant; or
causes or permits any portion of the Trust Fund to revert to or become
property of the Employer.
(e) Except as permitted by Regulations (including Regulation
1.411(d)-4) or other IRS guidance, no Plan amendment or transaction
having the effect of a Plan amendment (such as a merger, plan transfer
or similar transaction) shall be effective if it eliminates or reduces
any "Section 411(d)(6) protected benefit" or adds or modifies
conditions relating to "Section 411 (d)(6) protected benefits" which
results in a further restriction on such benefits unless such "Section
411 (d)(6) protected benefits" are preserved with respect to benefits
accrued as of the later of the adoption date or effective date of the
amendment. "Section 411(d)(6) protected benefits" are benefits
described in Code Section 411 (d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit. A Plan
amendment that eliminates or restricts the ability of a Participant to
receive payment of the Participant's interest in the Plan under a
particular optional form of benefit will be permissible if the
amendment satisfies the conditions in (1) and (2) below:
(1) The amendment provides a single-sum distribution form that is
otherwise identical to the optional form of benefit eliminated or
restricted. For purposes of this condition (1), a single-sum
distribution form is otherwise identical only if it is identical
in all respects to the eliminated or restricted optional form of
benefit (or would be identical except that it provides greater
rights to the Participant) except with respect to the timing of
payments after commencement.
(2) The amendment is not effective unless the amendment provides
that the amendment shall not apply to any distribution with an
Annuity Starting Date earlier than the earlier of: (i) the
ninetieth (90th) day after the date the Participant receiving the
distribution has been furnished a summary that reflects the
amendment and that satisfies the Act requirements at 29 CFR
2520.104b3 (relating to a summary of material modifications) or
(ii) the first day of the second Plan Year following the Plan
Year in which the amendment is adopted.
8.2 TERMINATION
(a) The Employer shall have the right at any time to terminate
the Plan by delivering to the Trustee and Administrator written notice
of such termination. Upon any full or partial termination, all amounts
credited to the affected Participants' Combined Accounts shall become
100% Vested and shall not thereafter be subject to forfeiture, and all
unallocated amounts, including Forfeitures, shall be allocated to the
accounts of all Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets to Participants in a manner that
is consistent with and satisfies the provisions of Section 6.5.
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Distributions to a Participant shall be made in cash (or in property
if permitted in the Adoption Agreement) or through the purchase of
irrevocable nontransferable deferred commitments from the Insurer.
Except as permitted by Regulations, the termination of the Plan shall
not result in the reduction of "Section 411 (d)(6) protected benefits"
as described in Section 8.1(e).
8.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
This Plan may be merged or consolidated with, or its assets and/or
liabilities may be transferred to any other plan only if the benefits which
would be received by a Participant of this Plan, in the event of a termination
of the plan immediately after such transfer, merger or consolidation, are at
least equal to the benefits the Participant would have received if the Plan had
terminated immediately before the transfer, merger or consolidation and such
transfer, merger or consolidation does not otherwise result in the elimination
or reduction of any "Section 41 l(d)(6) protected benefits" as described in
Section 8.1(e).
ARTICLE IX
TOP HEAVY PROVISIONS
9.1 TOP HEAVY PLAN REQUIREMENTS
Notwithstanding anything in this Plan to the contrary, for any Top
Heavy Plan Year, the Plan shall provide the special vesting requirements of Code
Section 416(b) pursuant to Section 6.4 of the Plan and the special minimum
allocation requirements of Code Section 416(c) pursuant to Section 4.3(t) of the
Plan. Except as otherwise provided in the Plan, the minimum allocation shall be
an Employer Non-Elective Contribution and, if no vesting schedule has been
selected in the Adoption Agreement, shall be subject to the 6 Year Graded
vesting schedule described in the Adoption Agreement.
9.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any plan year
beginning after December 31, 1983, if any of the following conditions
exists:
(1) if the "top heavy ratio" for this Plan exceeds sixty percent
(60%) and this Plan is not part of any "required aggregation
group" or "permissive aggregation group";
(2) if this Plan is a part of a "required aggregation group" but
not part of a "permissive aggregation group" and the "top heavy
ratio" for the group of plans exceeds sixty percent (60%); or
(3) if this Plan is a part of a "required aggregation group" and
part of a "permissive aggregation group" and the "top heavy
ratio" for the "permissive aggregation group" exceeds sixty
percent (60%).
(b) "Top heavy ratio" means, with respect to a "determination
date":
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(1) If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan (as defined
in Code Section 408(k))) and the Employer has not maintained any
defined benefit plan which during the 5-year period ending on the
"determination date" has or has had accrued benefits, the top
heavy ratio for this plan alone or for the "required aggregation
group" or "permissive aggregation group" as appropriate is a
fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the "determination date"
(including any part of any account balance distributed in the
5-year period ending on the "determination date"), and the
denominator of which is the sum of all account balances
(including any part of any account balance distributed in the
5-year period ending on the "determination date"), both computed
in accordance with Code Section 416 and the Regulations
thereunder. Both the numerator and denominator of the top heavy
ratio are increased to reflect any contribution not actually made
as of the "determination date," but which is required to be taken
into account on that date under Code Section 416 and the
Regulations thereunder.
(2) If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the
Employer maintains or has maintained one or more defined benefit
plans which during the 5-year period ending on the "determination
date" has or has had any accrued benefits, the top heavy ratio
for any "required aggregation group" or "permissive aggregation
group" as appropriate is a fraction, the numerator of which is
the sum of account balances under the aggregated defined
contribution plan or plans for all Key Employees, determined in
accordance with (1) above, and the present value of accrued
benefits under the aggregated defined benefit plan or plans for
all Key Employees as of the "determination date," and the
denominator of which is the sum of the account balances under the
aggregated defined contribution plan or plans for all
participants, determined in accordance with (1) above, and the
"present value" of accrued benefits under the defined benefit
plan or plans for all participants as of the "determination
date," all determined in accordance with Code Section 416 and the
Regulations thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of the top
heavy ratio are increased for any distribution of an accrued
benefit made in the five-year period ending on the determination
date.
(3) For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits will be
determined as of the most recent "valuation date" that falls
within or ends with the 12-month period ending on the
"determination date," except as provided in Code Section 416 and
the Regulations thereunder for the first and second plan years of
a defined benefit plan. The account balances and accrued benefits
of a participant (i) who is not a Key Employee but who was a Key
Employee in a prior year, or (ii) who has not been credited with
at least one Hour of Service with any Employer maintaining the
plan at any time during the 5-year period ending on the
"determination date" will be disregarded. The calculation of the
top heavy ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will be made in
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accordance with Code Section 416 and the Regulations thereunder.
Deductible Employee contributions will not be taken into account
for purposes of computing the top heavy ratio. When aggregating
plans the value of account balances and accrued benefits will be
calculated with reference to the "determination dates" that fall
within the same calendar year.
The accrued benefit of a participant other than a Key Employee
shall be determined under (i) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans
maintained by the employer, or (ii) if there is no such method,
as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of Code Section
411 (b)(1)(C).
(c) "Determination date" means, for any Plan Year subsequent to
the first Plan Year, the last day of the preceding Plan Year. For the
first Plan Year of the Plan, "determination date" means the last day
of that Plan Year.
(d) "Permissive aggregation group" means the "required
aggregation group" of plans plus any other plan or plans of the
Employer which, when considered as a group with the required
aggregation group, would continue to satisfy the requirements of Code
Sections 401(a)(4) and 410.
(e) "Present value" means the present value based only on the
interest and mortality rates specified in the Adoption Agreement.
(f) "Required aggregation group" means: (1) each qualified plan
of the Employer in which at least one Key Employee participates or
participated at any time during the determination period (regardless
of whether the plan has terminated), and (2) any other qualified plan
of the Employer which enables a plan described in (1) to meet the
requirements of Code Sections 401 (a)(4) or 410.
(g) "Valuation date" means the date elected by the Employer in
the Adoption Agreement as of which account balances or accrued
benefits are valued for purposes of calculating the "top heavy ratio."
ARTICLE X
MISCELLANEOUS
10.1 EMPLOYER ADOPTIONS
(a) Any organization may become the Employer hereunder by
executing the Adoption Agreement in a form satisfactory to the
Trustee, and it shall provide such additional information as the
Trustee may require. The consent of the Trustee to act as such shall
be signified by its execution of the Adoption Agreement or a separate
agreement (including, if elected in the Adoption Agreement, a separate
trust agreement).
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(b) Except as otherwise provided in this Plan, the affiliation of
the Employer and the participation of its Participants shall be
separate and apart from that of any other employer and its
participants hereunder.
10.2 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon the Employee as a Participant of this Plan.
10.3 ALIENATION
(a) Subject to the exceptions provided below and as otherwise
permitted by the Code and the Act, no benefit which shall be payable
to any person (including a Participant or the Participant's
Beneficiary) shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, or charge the same shall be void; and no
such benefit shall in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements, or torts of any such
person, nor shall it be subject to attachment or legal process for or
against such person, and the same shall not be recognized except to
such extent as may be required by law.
(b) Subsection (a) shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan by reason of a loan made pursuant
to Section 7.6. At the time a distribution is to be made to or for a
Participant's or Beneficiary's benefit, such portion of the amount to
be distributed as shall equal such indebtedness shall be paid to the
Plan, to apply against or discharge such indebtedness. Prior to making
a payment, however, the Participant or Beneficiary must be given
notice by the Administrator that such indebtedness is to be so paid in
whole or part from the Participant's interest in the Plan. If the
Participant or Beneficiary does not agree that the indebtedness is a
valid claim against the Participant's interest in the Plan, the
Participant or Beneficiary shall be entitled to a review of the
validity of the claim in accordance with procedures provided in
Sections 2.10 and 2.11.
(c) Subsection (a) shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order," a former
spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
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(d) Notwithstanding any provision of this Section to the
contrary, an offset to a Participant's accrued benefit against an
amount that the Participant is ordered or required to pay the Plan
with respect to a judgment, order, or decree issued, or a settlement
entered into, on or after August 5, 1997, shall be permitted in
accordance with Code Sections 40 1 (a)(I 3)(C) and (D).
10.4 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the
Code, the Act and the laws of the state or commonwealth in which the Employer's
(or if there is a corporate Trustee, the Trustee's) principal office is located
(unless otherwise designated in the Adoption Agreement), other than its laws
respecting choice of law, to the extent not pre-empted by the Act.
10.5 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also used in another
gender in all cases where they would so apply, and whenever any words are used
herein in the singular or plural form, they shall be construed as though they
were also used in the other form in all cases where they would so apply.
10.6 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee, the Employer or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee, the Employer or the Administrator, they shall
be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
10.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted
by law, it shall be impossible by operation of the Plan or of the
Trust, by termination of either, by power of revocation or amendment,
by the happening of any contingency, by collateral arrangement or by
any other means, for any part of the corpus or income of any Trust
Fund maintained pursuant to the Plan or any funds contributed thereto
to be used for, or diverted to, purposes other than the exclusive
benefit of Participants, Former Participants, or their Beneficiaries.
(b) In the event the Employer shall make a contribution under a
mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer may
demand repayment of such contribution at any time within one (1) year
following the time of payment and the Trustee shall return such amount
to the Employer within the one (1) year period. Earnings of the Plan
attributable to the contributions may not be returned to the Employer
but any losses attributable thereto must reduce the amount so
returned.
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(c) Except as specifically stated in the Plan, any contribution
made by the Employer to the Plan (if the Employer is not tax-exempt)
is conditioned upon the deductibility of the contribution by the
Employer under the Code and, to the extent any such deduction is
disallowed, the Employer may, within one (1) year following a final
determination of the disallowance, whether by agreement with the
Internal Revenue Service or by final decision of a court of competent
jurisdiction, demand repayment of such disallowed contribution and the
Trustee shall return such contribution within one (1) year following
the disallowance. Earnings of the Plan attributable to the
contribution may not be returned to the Employer, but any losses
attributable thereto must reduce the amount so returned.
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
The Employer, Administrator and Trustee, and their successors, shall
not be responsible for the validity of any Contract issued hereunder or for the
failure on the part of the Insurer to make payments provided by any such
Contract, or for the action of any person which may delay payment or render a
Contract null and void or unenforceable in whole or in part.
10.9 INSURER'S PROTECTIVE CLAUSE
Except as otherwise agreed upon in writing between the Employer and
the Insurer, an Insurer which issues any Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The Insurer shall be protected and held harmless in acting in
accordance with any written direction of the Administrator or Trustee, and shall
have no duty to see to the application of any funds paid to the Trustee, nor be
required to question any actions directed by the Administrator or Trustee.
Regardless of any provision of this Plan, the Insurer shall not be required to
take or permit any action or allow any benefit or privilege contrary to the
terms of any Contract which it issues hereunder, or the rules of the Insurer.
10.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, the Participant's legal
representative, Beneficiary, or to any guardian or committee appointed for such
Participant or Beneficiary in accordance with the provisions of this Plan,
shall, to the extent thereof, be in full satisfaction of all claims hereunder
against the Trustee and the Employer.
10.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (I) the Employer, (2) the
Administrator, (3) the Trustee (if the Trustee has discretionary authority as
elected in the Adoption Agreement or as otherwise agreed upon by the Employer
and the Trustee), and (4) any Investment Manager appointed hereunder. The named
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Fiduciaries shall have only those specific powers, duties, responsibilities, and
obligations as are specifically given them under the Plan including, but not
limited to, any agreement allocating or delegating their responsibilities, the
terms of which are incorporated herein by reference. In general, the Employer
shall have the sole responsibility for making the contributions provided for
under the Plan; and shall have the sole authority to appoint and remove the
Trustee and the Administrator; to formulate the Plan's "funding policy and
method"; and to amend the elective provisions of the Adoption Agreement or
terminate, in whole or in part, the Plan. The Administrator shall have the sole
responsibility for the administration of the Plan, which responsibility is
specifically described in the Plan. If the Trustee has discretionary authority,
it shall have the sole responsibility of management of the assets held under the
Trust, except those assets, the management of which has been assigned to an
Investment Manager or Administrator, who shall be solely responsible for the
management of the assets assigned to it, all as specifically provided in the
Plan. Each named Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with the provisions of
the Plan, authorizing or providing for such direction, information or action.
Furthermore, each named Fiduciary may rely upon any such direction, information
or action of another named Fiduciary as being proper under the Plan, and is not
required under the Plan to inquire into the propriety of any such direction,
information or action. It is intended under the Plan that each named Fiduciary
shall be responsible for the proper exercise of its own powers, duties,
responsibilities and obligations under the Plan. No named Fiduciary shall
guarantee the Trust Fund in any manner against investment loss or depreciation
in asset value. Any person or group may serve in more than one Fiduciary
capacity.
10.13 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
10.14 APPROVAL BY INTERNAL REVENUE SERVICE
Notwithstanding anything herein to the contrary, if, pursuant to a
timely application filed by or on behalf of the Plan, the Commissioner of the
Internal Revenue Service or the Commissioner's delegate should determine that
the Plan does not initially qualify as a tax-exempt plan under Code Sections 401
and 501, and such determination is not contested, or if contested, is finally
upheld, then if the Plan is a new plan, it shall be void ab initio and all
amounts contributed to the Plan, by the Employer, less expenses paid, shall be
returned within one (1) year and the Plan shall terminate, and the Trustee shall
be discharged from all further obligations. If the disqualification relates to a
Plan amendment, then the Plan shall operate as if it had not been amended. If
the Employer's Plan fails to attain or retain qualification, such Plan will no
longer participate in this prototype plan and will be considered an individually
designed plan.
10.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner.
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10.16 PAYMENT OF BENEFITS
Except as otherwise provided in the Plan, benefits under this Plan
shall be paid, subject to Sections 6.10, 6.11 and 12.9, only upon death, Total
and Permanent Disability, normal or early retirement, termination of employment,
or termination of the Plan.
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
Notwithstanding anything herein to the contrary, with the consent of
the Employer and Trustee, any Affiliated Employer may adopt the Employer's Plan
and all of the provisions hereof, and participate herein and be known as a
Participating Employer, by a properly executed document evidencing said intent
and will of such Participating Employer. Regardless of the preceding, an entity
that ceases to be an Affiliated Employer may continue to be a Participating
Employer through the end of the transition period for certain dispositions set
forth in Code Section 4 1 0(b)(6)(C). In the event a Participating Employer is
not an Affiliated Employer and the transition period in the preceding sentence,
if applicable, has expired, then this Plan will be considered an individually
designed plan.
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each Participating Employer shall be required to select the
same Adoption Agreement provisions as those selected by the Employer
other than the Plan Year, the Fiscal Year, and such other items that
must, by necessity, vary among employers.
(b) The Trustee may, but shall not be required to, commingle,
hold and invest as one Trust Fund all contributions made by
Participating Employers, as well as all increments thereof. However,
the assets of the Plan shall, on an ongoing basis, be available to pay
benefits to all Participants and Beneficiaries under the Plan without
regard to the Employer or Participating Employer who contributed such
assets.
(c) Unless the Employer otherwise directs, any expenses of the
Plan which are to be paid by the Employer or borne by the Trust Fund
shall be paid by each Participating Employer in the same proportion
that the total amount standing to the credit of all Participants
employed by such Employer bears to the total standing to the credit of
all Participants.
11.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of this
Plan; provided, however, that with respect to all of its relations with the
Trustee and Administrator for purposes of this Plan, each Participating Employer
shall be deemed to have designated irrevocably the Employer as its agent. Unless
the context of the Plan clearly indicates otherwise, the word "Employer" shall
be deemed to include each Participating Employer as related to its adoption of
the Plan.
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11.4 EMPLOYEE TRANSFERS
In the event an Employee is transferred between Participating
Employers, accumulated service and eligibility shall be carried with the
Employee involved. No such transfer shall effect a termination of employment
hereunder, and the Participating Employer to which the Employee is transferred
shall thereupon become obligated hereunder with respect to such Employee in the
same manner as was the Participating Employer from whom the Employee was
transferred.
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES
Any contribution or Forfeiture subject to allocation during each
Plan Year shall be allocated among all Participants of all Participating
Employers in accordance with the provisions of this Plan. However, if a
Participating Employer is not an Affiliated Employer (due to the transition rule
for certain dispositions set forth in Code Section 410(b)(6)(C)) then any
contributions made by such Participating Employer will only be allocated among
the Participants eligible to share of the Participating Employer. On the basis
of the information furnished by the Administrator, the Trustee may keep separate
books and records concerning the affairs of each Participating Employer
hereunder and as to the accounts and credits of the Employees of each
Participating Employer. The Trustee may, but need not, register Contracts so as
to evidence that a particular Participating Employer is the interested Employer
hereunder, but in the event of an Employee transfer from one Participating
Employer to another, the employing Participating Employer shall immediately
notify the Trustee thereof.
11.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall
be a Participating Employer that is an Affiliated Employer hereunder shall only
be by the written action of each and every Participating Employer and with the
consent of the Trustee where such consent is necessary in accordance with the
terms of this Plan.
11.7 DISCONTINUANCE OF PARTICIPATION
Except in the case of a standardized Plan, any Participating
Employer that is an Affiliated Employer shall be permitted to discontinue or
revoke its participation in the Plan at any time. At the time of any such
discontinuance or revocation, satisfactory evidence thereof and of any
applicable conditions imposed shall be delivered to the Trustee. The Trustee
shall thereafter transfer, deliver and assign Contracts and other Trust Fund
assets allocable to the Participants of such Participating Employer to such new
trustee or custodian as shall have been designated by such Participating
Employer, in the event that it has established a separate qualified retirement
plan for its employees provided, however, that no such transfer shall be made if
the result is the elimination or reduction of any "Section 411 (d)(6) protected
benefits" as described in Section 8.1(e). If no successor is designated, the
Trustee shall retain such assets for the Employees of said Participating
Employer pursuant to the provisions of Article VII hereof. In no such event
shall any part of the corpus or income of the Trust Fund as it relates to such
Participating Employer be used for or diverted to purposes other than for the
exclusive benefit of the employees of such Participating Employer.
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11.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary
rules or regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in part from
making a contribution which it would otherwise have made under the Plan by
reason of having no current or accumulated earnings or profits, or because such
earnings or profits are less than the contribution which it would otherwise have
made, then, pursuant to Code Section 404(a)(3)(B), so much of the contribution
which such Participating Employer was so prevented from making may be made, for
the benefit of the participating employees of such Participating Employer, by
other Participating Employers who are members of the same affiliated group
within the meaning of Code Section 1504 to the extent of their current or
accumulated earnings or profits, except that such contribution by each such
other Participating Employer shall be limited to the proportion of its total
current and accumulated earnings or profits remaining after adjustment for its
contribution to the Plan made without regard to this paragraph which the total
prevented contribution bears to the total current and accumulated earnings or
profits of all the Participating Employers remaining after adjustment for all
contributions made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose employees a contribution
is made under this paragraph shall not be required to reimburse the contributing
Participating Employers.
ARTICLE XII
CASH OR DEFERRED PROVISIONS
Except as specifically provided elsewhere in this Plan, the
provisions of this Article shall apply with respect to any 401(k) Profit Sharing
Plan regardless of any provisions in the Plan to the contrary.
12.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For each Plan Year, the Employer will (or may with respect to
any discretionary contributions) contribute to the Plan:
(1) The amount of the total salary reduction elections of all
Participants made pursuant to Section 12.2(a), which amount shall
be deemed Elective Deferrals, plus
(2) If elected in the Adoption Agreement, a matching contribution
equal to the percentage, if any, specified in the Adoption
Agreement of the Elective Deferrals of each Participant eligible
to share in the allocations of the matching contribution, which
amount shall be deemed an Employer's matching contribution or
Qualified Matching Contribution as elected in the Adoption
Agreement, plus
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(3) If elected in the Adoption Agreement, a Prevailing Wage
Contribution or a discretionary amount determined each year by
the Employer, which amount if any, shall be deemed an Employer's
Non-Elective Contribution, plus
(4) If elected in the Adoption Agreement, a Qualified
Non-Elective Contribution.
(b) Notwithstanding the foregoing, if the Employer is not a
tax-exempt entity, then the Employer's contributions for any Fiscal
Year may generally not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404.
However, to the extent necessary to provide the top heavy minimum
allocations, the Employer shall make a contribution even if it exceeds
current or accumulated Net Profit or the amount that is deductible
under Code Section 404. All contributions by the Employer shall be
made in cash or in such property as is acceptable to the Trustee.
12.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer a portion of Compensation
which would have been received in the Plan Year, but for the salary
reduction election, subject to the limitations of this Section and the
Adoption Agreement. A salary reduction election (or modification of an
earlier election) may not be made with respect to Compensation which
is currently available on or before the date the Participant executed
such election, or if later, the later of the date the Employer adopts
this cash or deferred arrangement or the date such arrangement first
became effective. Any elections made pursuant to this Section shall
become effective as soon as is administratively feasible. If the
automatic election option is elected in the Adoption Agreement, then
in the event a Participant fails to make a deferral election and does
not affirmatively elect to receive cash, such Participant shall be
deemed to have made a deferral election equal to the percentage of
Compensation set forth in the Adoption Agreement. The automatic
election may, in accordance with procedures established by the
Administrator, be applied to all Participants or to Eligible Employees
who become Participants after a certain date. For purposes of this
Section, the annual dollar limitation of Code Section 401(a)(17)
($150,000 as adjusted) shall not apply.
Additionally, if elected in the Adoption Agreement, each Participant
may elect to defer a different percentage or amount of any cash bonus to be paid
by the Employer during the Plan Year. A deferral election may not be made with
respect to cash bonuses which are currently available on or before the date the
Participant executes such election.
The amount by which Compensation and/or cash bonuses are reduced
shall be that Participant's Elective Deferrals and shall be treated as an
Employer contribution and allocated to that Participant's Elective Deferral
Account.
Once made, a Participant's election to reduce Compensation shall
remain in effect until modified or terminated. Modifications may be made as
specified in the Adoption Agreement, and terminations may be made at any time.
97
Any modification or termination of an election will become effective as soon as
is administratively feasible.
(b) The balance in each Participant's Elective Deferral Account,
Qualified Matching Contribution Account and Qualified Non-Elective
Contribution Account shall be fully Vested at all times and, except as
otherwise provided herein, shall not be subject to Forfeiture for any
reason.
(c) Amounts held in a Participant's Elective Deferral Account,
Qualified Matching Contribution Account and Qualified Non-Elective
Account may only be distributable as provided in (4), (5) or (6) below
or as provided under the other provisions of this Plan, but in no
event prior to the earlier of the following events or any other events
permitted by the Code or Regulations:
(1) the Participant's separation from service, Total and
Permanent Disability, or death;
(2) the Participant's attainment of age 59 1/2;
(3) the proven financial hardship of the Participant, subject to
the limitations of Section 12.9;
(4) the termination of the Plan without the existence at the time
of Plan tennination of another defined contribution plan or the
establishment of a successor defined contribution plan by the
Employer or an Affiliated Employer within the period ending
twelve months after distribution of all assets from the Plan
maintained by the Employer. For this purpose, a defined
contribution does not include an employee stock ownership plan
(as defined in Code Section 4975(e)(7) or 409), a simplified
employee pension plan (as defined in Code Section 408(k)), or a
SIMPLE individual retirement account plan (as defined in Code
Section 408(p));
(5) the date of the sale by the Employer to an entity that is not
an Affiliated Employer of substantially all of the assets (within
the meaning of Code Section 409(d)(2)) with respect to a
Participant who continues employment with the corporation
acquiring such assets; or
(6) the date of the sale by the Employer or an Affiliated
Employer of its interest in a subsidiary (within the meaning of
Code Section 409(d)(3)) to an entity that is not an Affiliated
Employer with respect to a Participant who continues employment
with such subsidiary.
Distributions that are made because of (4), (5), or (6) above
must be made in a lump-sum.
(d) A Participant's "elective deferrals" made under this Plan and
all other plans, contracts or arrangements of the Employer maintaining
this Plan during any calendar year shall not exceed the dollar
limitation imposed by Code Section 402(g), as in effect at the
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beginning of such calendar year. This dollar limitation shall be
adjusted annually pursuant to the method provided in Code Section
415(d) in accordance with Regulations. For this purpose, "elective
deferrals" means, with respect to a calendar year, the sum of all
employer contributions made on behalf of such Participant pursuant to
an election to defer under any qualified cash or deferred arrangement
as described in Code Section 401(k), any salary reduction simplified
employee pension (as defined in Code Section 408(k)(6)), any SIMPLE
IRA plan described in Code Section 408(p), any eligible deferred
compensation plan under Code Section 457, any plans described under
Code Section 501(c)(18), and any Employer contributions made on the
behalf of a Participant for the purchase of an annuity contract under
Code Section 403(b) pursuant to a salary reduction agreement.
"Elective deferrals" shall not include any deferrals properly
distributed as excess "Annual Additions" pursuant to Section 4.5.
(e) If a Participant has Excess Deferrals for a taxable year, the
Participant may, not later than March 1st following the close of such
taxable year, notify the Administrator in writing of such excess and
request that the Participant's Elective Deferrals under this Plan be
reduced by an amount specified by the Participant. In such event, the
Administrator shall direct the distribution of such excess amount (and
any "Income" allocable to such excess amount) to the Participant not
later than the first April 15th following the close of the
Participant's taxable year. Any distribution of less than the entire
amount of Excess Deferrals and "Income" shall be treated as a pro rata
distribution of Excess Deferrals and "Income." The amount distributed
shall not exceed the Participant's Elective Deferrals under the Plan
for the taxable year. Any distribution on or before the last day of
the Participant's taxable year must satisfy each of the following
conditions:
(1) the Participant shall designate the distribution as Excess
Deferrals;
(2) the distribution must be made after the date on which the
Plan received the Excess Deferrals; and
(3) the Plan must designate the distribution as a distribution of
Excess Deferrals.
Regardless of the preceding, if a Participant has Excess
Deferrals solely from elective deferrals made under this Plan or any
other plan maintained by the Employer, a Participant will be deemed to
have notified the Administrator of such excess amount and the
Administrator shall direct the distribution of such Excess Deferrals
in a manner consistent with the provisions of this subsection.
Any distribution made pursuant to this subsection shall be made
first from unmatched Elective Deferrals and, thereafter, from Elective
Deferrals which are matched. Matching contributions which relate to
Excess Deferrals that are distributed pursuant to this Section 12.2(e)
shall be treated as a Forfeiture to the extent required pursuant to
Code Section 401(a)(4) and the Regulations thereunder.
99
For the purpose of this subsection, "Income" means the amount of
income or loss allocable to a Participant's Excess Deferrals, which
amount shall be allocated in the same manner as income or losses are
allocated pursuant to Section 4.3(c). However, "Income" for the period
between the end of the taxable year of the Participant and the date of
the distribution (the "gap period") is not required to be distributed.
(f) Notwithstanding the preceding, a Participant's Excess
Deferrals shall be reduced, but not below zero, by any distribution
and/or recharacterization of Excess Deferrals pursuant to Section
12.5(a) for the Plan Year beginning with or within the taxable year of
the Participant.
(g) In the event a Participant has received a hardship
distribution pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any
other plan maintained by the Employer or from the Participant's
Elective Deferral Account pursuant to Section 12.9, then such
Participant shall not be permitted to elect to have Elective Deferrals
contributed to the Plan for a period of twelve (12) months following
the receipt of the distribution. Furthermore, the dollar limitation
under Code Section 402(g) shall be reduced, with respect to the
Participant's taxable year following the taxable year in which the
hardship distribution was made, by the amount of such Participant's
Elective Deferrals, if any, made pursuant to this Plan (and any other
plan maintained by the Employer) for the taxable year of the hardship
distribution.
(h) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market
value of the Participant's Elective Deferral Account shall be used to
provide benefits to the Participant or the Participant's Beneficiary.
(i) If during a Plan Year, it is projected that the aggregate
amount of Elective Deferrals to be allocated to all Highly Compensated
Participants under this Plan would cause the Plan to fail the tests
set forth in Section 12.4, then the Administrator may automatically
reduce the deferral amount of affected Highly Compensated
Participants, beginning with the Highly Compensated Participant who
has the highest actual deferral ratio until it is anticipated the Plan
will pass the tests or until the actual deferral ratio equals the
actual deferral ratio of the Highly Compensated Participant having the
next highest actual deferral ratio. This process may continue until it
is anticipated that the Plan will satisfy one of the tests set forth
in Section 12.4. Alternatively, the Employer may specify a maximum
percentage of Compensation that may be deferred by Highly Compensated
Participants.
(j) The Employer and the Administrator shall establish procedures
necessary to implement the salary reduction elections provided for
herein. Such procedures may contain limits on salary deferral
elections such as limiting elections to whole percentages of
Compensation or to equal dollar amounts per pay period that an
election is in effect.
12.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
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(a) The Administrator shall establish and maintain an account in
the name of each Participant to which the Administrator shall credit
as of each Anniversary Date, or other Valuation Date, all amounts
allocated to each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of Employer contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate contributions as
follows:
(1) With respect to Elective Deferrals made pursuant to Section
12.1(a)(1), to each Participant's Elective Deferral Account in an
amount equal to each such Participant's Elective Deferrals for
the year.
(2) With respect to the Employer's matching contribution made
pursuant to Section 12. 1 (a)(2), to each Participant's Account,
or Participant's Qualified Matching Contribution Account, as
elected in the Adoption Agreement, in accordance with Section
12.1(a)(2).
Except, however, in order to be entitled to receive any Employer
matching contribution, a Participant must satisfy the conditions
for sharing in the Employer matching contribution as set forth in
the Adoption Agreement. Furthermore, regardless of any election
in the Adoption Agreement to the contrary, for the Plan Year in
which this Plan terminates, a Participant shall only be eligible
to share in the allocation of the Employer's contributions for
the Plan Year if the Participant is employed at the end of the
Plan Year and has completed a Year of Service (or Period of
Service if the Elapsed Time Method is elected).
(3) With respect to the Employer's Non-Elective Contribution made
pursuant to Section 12.1(a)(3), to each Participant's Account in
accordance with the provisions of Section 4.3(b)(2) or (3)
whichever is applicable.
(4) With respect to the Employer's Qualified Non-Elective
Contribution made pursuant to Section 12.1(a)(4), to each
Participant's (excluding Highly Compensated Employees, if elected
in the Adoption Agreement) Qualified Non-Elective Contribution
Account in accordance with the Adoption Agreement.
(c) Notwithstanding anything in the Plan to the contrary, in
determining whether a Non-Key Employee has received the required
minimum allocation pursuant to Section 4.3(f) such Non-Key Employee's
Elective Deferrals and matching contributions used to satisfy the ADP
tests in Section 12.4 or the ACP tests in Section 12.6 shall not be
taken into account.
(d) Notwithstanding anything herein to the contrary, Participants
who terminated employment during the Plan Year shall share in the
salary deferral contributions made by the Employer for the year of
termination without regard to the Hours of Service credited.
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(e) Notwithstanding anything herein to the contrary (other than
Sections 4.3(f) and 12.3(f)), Participants shall only share in the
allocations of the Employer's matching contribution made pursuant to
Section 12.1(a)(2), the Employer's Non-Elective Contributions made
pursuant to Section 12.1(a)(3), the Employer's Qualified Non-Elective
Contribution made pursuant to Section 12.1(a)(4), and Forfeitures as
provided in the Adoption Agreement. If no election is made in the
Adoption Agreement, then a Participant shall be eligible to share in
the allocation of the Employer's contribution for the year if the
Participant completes more than 500 Hours of Service (or three (3)
Months of Service if the Elapsed Time method is chosen in the Adoption
Agreement) during the Plan Year or who is employed on the last day of
the Plan Year. Furthermore, regardless of any election in the Adoption
Agreement to the contrary, for the Plan Year in which this Plan
terminates, a Participant shall only be eligible to share in the
allocation of the Employer's contributions for the Plan Year if the
Participant is employed at the end of the Plan Year and has completed
a Year of Service (or Period of Service if the Elapsed Time Method is
elected).
(f) Notwithstanding anything in this Section to the contrary, the
provisions of this subsection apply for any Plan Year if, in the
non-standardized Adoption Agreement, the Employer elected to apply the
410(b) ratio percentage failsafe provisions and the Plan fails to
satisfy the "ratio percentage test" due to a last day of the Plan Year
allocation condition or an Hours of Service (or months of service)
allocation condition. A plan satisfies the "ratio percentage test" if,
on the last day of the Plan Year, the "benefiting ratio" of the
Non-Highly Compensated Employees who are "includible" is at least 70%
of the "benefiting ratio" of the Highly Compensated Employees who are
"includible." The "benefiting ratio" of the Non-Highly Compensated
Employees is the number of "includible" NonHighly Compensated
Employees "benefiting" under the Plan divided by the number of
"includible" Employees who are Non-Highly Compensated Employees. The
"benefiting ratio" of the Highly Compensated Employees is the number
of Highly Compensated Employees "benefiting" under the Plan divided by
the number of "includible" Highly Compensated Employees. "Includible"
Employees are all Employees other than: (1) those Employees excluded
from participating in the plan for the entire Plan Year by reason of
the collective bargaining unit exclusion or the nonresident alien
exclusion described in the Code or by reason of the age and service
requirements of Article III; and (2) any Employee who incurs a
separation from service during the Plan Year and fails to complete at
least 501 Hours of Service (or three (3) months of service if the
Elapsed Time Method is being used) during such Plan Year.
For purposes of this subsection, an Employee is "benefiting"
under the Plan on a particular date if, under the Plan, the Employee
is entitled to an Employer contribution or an allocation of
Forfeitures for the Plan Year.
If this subsection applies, then the Administrator will suspend
the allocation conditions for the "includible" Non-Highly Compensated
Employees who are Participants, beginning first with the "includible"
Employees employed by the Employer on the last day of the Plan Year,
then the "includible" Employees who have the latest separation from
service during the Plan Year, and continuing to suspend the allocation
conditions for each "includible" Employee who incurred an earlier
102
separation from service, from the latest to the earliest separation
from service date, until the Plan satisfies the "ratio percentage
test" for the Plan Year. If two or more "includible" Employees have a
separation from service on the same day, then the Administrator will
suspend the allocation conditions for all such "includible" Employees,
irrespective of whether the Plan can satisfy the "ratio percentage
test" by accruing benefits for fewer than all such "includible"
Employees. If the Plan for any Plan Year suspends the allocation
conditions for an "includible" Employee, then that Employee will share
in the allocation for that Plan Year of the Employer contribution and
Forfeitures, if any, without regard to whether the Employee has
satisfied the other allocation conditions set forth in this Section.
If the Plan includes Employer matching contributions subject to
ACP testing, this subsection applies separately to the Code
Section 401 (m) portion of the Plan.
12.4 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Except as otherwise provided herein, this subsection applies
if the Prior Year Testing method is elected in the Adoption Agreement.
The "Actual Deferral Percentage" (hereinafter "ADP") for a Plan Year
for Participants who are Highly Compensated Employees (hereinafter
"HCEs") for each Plan Year and the prior year's ADP for Participants
who were Non-Highly Compensated Employees (hereinafter "NHCEs") for
the prior Plan Year must satisfy one of the following tests:
(1) The ADP for a Plan Year for Participants who are HCEs for the
Plan Year shall not exceed the prior year's ADP for Participants
who were NHCEs for the prior Plan Year multiplied by 1.25; or
(2) The ADP for a Plan Year for Participants who are HCEs for the
Plan Year shall not exceed the prior year's ADP for Participants
who were NHCEs for the prior Plan Year multiplied by 2.0,
provided that the ADP for Participants who are HCEs does not
exceed the prior year's ADP for Participants who were NHCEs in
the prior Plan Year by more than two (2) percentage points.
Notwithstanding the above, for purposes of applying the foregoing
tests with respect to the first Plan Year in which the Plan
permits any Participant to make Elective Deferrals, the ADP for
the prior year's NHCEs shall be deemed to be three percent (3%)
unless the Employer has elected in the Adoption Agreement to use
the current Plan Year's ADP for these Participants. However, the
provisions of this paragraph may not be used if the Plan is a
successor plan or is otherwise prohibited from using such
provisions pursuant to IRS Notice 981 (or superseding guidance).
(b) Notwithstanding the foregoing, if the Current Year Testing
method is elected in the Adoption Agreement, the ADP tests in (a)(1)
and (a)(2), above shall be applied by comparing the current Plan
Year's ADP for Participants who are HCEs with the current Plan Year's
ADP (rather than the prior Plan Year's ADP) for Participants who are
NHCEs for the current Plan Year. Once made, this election can only be
changed if the Plan meets the requirements for changing to the Prior
Year Testing method set forth in IRS Notice 98-1 (or superseding
103
guidance). Furthermore, this Plan must use the same testing method for
both the ADP and ACP tests for Plan Years beginning on or after the
date the Employer adopts its GUST restated plan.
(c) This subsection applies to prevent the multiple use of the
test set forth in subsection (a)(2) above. Any HCE eligible to make
Elective Deferrals pursuant to Section 12.2 and to make after-tax
voluntary Employee contributions or to receive matching contributions
under this Plan or under any other plan maintained by the Employer or
an Affiliated Employer, shall have either the actual deferral ratio
adjusted in the manner described in Section 12.5 or the actual
contribution ratio adjusted in the manner described in Section 12.7 so
that the "Aggregate Limit" is not exceeded pursuant to Regulation
1.401 (m)-2. The amounts in excess of the "Aggregate Limit" shall be
treated as either an Excess Contribution or an Excess Aggregate
Contribution. The ADP and ACP of the HCEs are determined after any
corrections required to meet the ADP and ACP tests and are deemed to
be the maximum permitted under such tests for the Plan Year. Multiple
use does not occur if either the ADP or ACP of the HCEs does not
exceed 1.25 multiplied by the ADP and ACP of the NHCEs.
"Aggregate Limit" means the sum of (i) 125 percent of the greater
of the ADP of the NHCEs for the prior Plan Year or the ACP of such
NHCEs under the plan subject to Code Section 401 (m) for the Plan Year
beginning with or within the prior Plan Year of the cash or deferred
arrangement and (ii) the lesser of 200% or two (2) plus the lesser of
such ADP or ACP. "Lesser" is substituted for "greater" in (i) above,
and "greater" is substituted for "lesser" after "two (2) plus the" in
(ii) above if it would result in a larger Aggregate Limit. If the
Employer has elected in the Adoption Agreement to use the Current Year
Testing method, then in calculating the "Aggregate Limit" for a
particular Plan Year, the NHCEs ADP and ACP for that Plan Year,
instead of the prior Plan Year, is used.
(d) A Participant is an HCE for a particular Plan Year if the
Participant meets the definition of an HCE in effect for that Plan
Year. Similarly, a Participant is an NHCE for a particular Plan Year
if the Participant does not meet the definition of an HCE in effect
for that Plan Year.
(e) For the purposes of this Section and Section 12.5, ADP means,
for a specific group of Participants for a Plan Year, the average of
the ratios (calculated separately for each Participant in such group)
of (1) the amount of Employer contributions actually paid over to the
Plan on behalf of such Participant for the Plan Year to (2) the
Participant's 414(s) Compensation for such Plan Year. Employer
contributions on behalf of any participant shall include: (1) any
Elective Deferrals made pursuant to the Participant's deferral
election (including Excess Deferrals of HCEs), but excluding (i)
Excess Deferrals of NHCEs that arise solely from Elective Deferrals
made under the plan or plans of this Employer and (ii) Elective
Deferrals that are taken into account in the ACP tests set forth in
Section 12.6 (provided the ADP test is satisfied both with and without
exclusion of these Elective Deferrals); and (2) at the election of the
Employer, Qualified Non-Elective Contributions and Qualified Matching
Contributions to the extent such contributions are not used to satisfy
the ACP test.
104
The actual deferral ratio for each Participant and the ADP for
each group shall be calculated to the nearest one-hundredth of one
percent. Elective Deferrals allocated to each Highly Compensated
Participant's Elective Deferral Account shall not be reduced by Excess
Deferrals to the extent such excess amounts are made under this Plan
or any other plan maintained by the Employer.
(f) For purposes of this Section and Section 12.5, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to make salary deferrals pursuant to
Section 12.2 for the Plan Year. Such Participants who fail to make
Elective Deferrals shall be treated for ADP purposes as Participants
on whose behalf no Elective Deferrals are made.
(g) In the event this Plan satisfies the requirements of Code
Sections 401(a)(4), 401(k), or 410(b) only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the ADP of
Employees as if all such plans were a single plan. Any adjustments to
the NHCE ADP for the prior year will be made in accordance with IRS
Notice 98-1 and any superseding guidance, unless the Employer has
elected in the Adoption Agreement to use the Current Year Testing
method. Plans may be aggregated in order to satisfy Code Section
401(k) only if they have the same Plan Year and use the same ADP
testing method.
(h) The ADP for any Participant who is an HCE for the Plan Year
and who is eligible to have Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP test)
allocated to such Participant's accounts under two (2) or more
arrangements described in Code Section 401(k), that are maintained by
the Employer, shall be determined as if such Elective Deferrals (and,
if applicable, such Qualified Non-Elective Contributions or Qualified
Matching Contributions, or both) were made under a single arrangement
for purposes of determining such HCE's actual deferral ratio. However,
if the cash or deferred arrangements have different Plan Years, this
paragraph shall be applied by treating all cash or deferred
arrangements ending with or within the same calendar year as a single
arrangement. Notwithstanding the foregoing, certain plans shall be
treated as separate if mandatorily disaggregated under Regulations
under Code Section 401.
(i) For purposes of determining the ADP and the amount of Excess
Contributions pursuant to Section 12.5, only Elective Deferrals,
Qualified Non-Elective Contributions and Qualified Matching
Contributions contributed to the Plan prior to the end of the twelve
(12) month period immediately following the Plan Year to which the
contributions relate shall be considered.
(j) Notwithstanding anything in this Section to the contrary, the
provisions of this Section and Section 12.5 may be applied separately
(or will be applied separately to the extent required by Regulations)
to each "plan" within the meaning of Regulation 1.401(k)-t (g)( I 1).
Furthermore, for Plan Years beginning after December 31, 1998, the
105
provisions of Code Section 401(k)(3)(F) may be used to exclude from
consideration all Non-Highly Compensated Employees who have not
satisfied the minimum age and service requirements of Code Section 4 1
0(a)(1)(A).
12.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
(a) In the event (or, with respect to subsection (c) when the
Prior Year Testing method is being used, if it is anticipated) that
for Plan Years beginning after December 31, 1996, the Plan does not
satisfy one of the tests set forth in Section 12.4, the Administrator
shall adjust Excess Contributions or the Employer shall make
contributions pursuant to the options set forth below or any
combination thereof. However, if the Prior Year testing method is
being used and it is anticipated that the Plan might not satisfy one
of such tests, then the Employer may make contributions pursuant to
the options set forth in subsection (c) below.
(b) On or before the fifteenth day of the third month following
the end of each Plan Year, but in no event later than the close of the
following Plan Year, the Highly Compensated Participant allocated the
largest amount of Elective Deferrals shall have a portion of such
Elective Deferrals (and "Income" allocable to such amounts)
distributed (and/or, at the Participant's election, recharacterized as
a after-tax voluntary Employee contribution pursuant to Section 4.8)
until the total amount of Excess Contributions has been distributed,
or until the amount of the Participant's Elective Deferrals equals the
Elective Deferrals of the Highly Compensated Participant having the
next largest amount of Elective Deferrals allocated. This process
shall continue until the total amount of Excess Contributions has been
distributed. Any distribution and/or recharacterization of Excess
Contributions shall be made in the following order:
(1) With respect to the distribution of Excess Contributions,
such distribution:
(i) may be postponed but not later than the close of the
Plan Year following the Plan Year to which they are
allocable;
(ii) shall be made first from unmatched Elective Deferrals
and, thereafter, simultaneously from Elective Deferrals
which are matched and matching contributions which relate to
such Elective Deferrals. Matching contributions which relate
to Excess Contributions shall be forfeited unless the
related matching contribution is distributed as an Excess
Aggregate Contribution pursuant to Section 12.7;
(iii) shall be adjusted for "Income"; and
(iv) shall be designated by the Employer as a distribution
of Excess Contributions (and "Income").
(2) With respect to the recharacterization of Excess
Contributions pursuant to (a) above, such recharacterized
amounts:
(i) shall be deemed to have occurred on the date on which
the last of those Highly Compensated Participants with
Excess Contributions to be recharacterized is notified of
the
106
recharacterization and the tax consequences of such
recharacterization;
(ii) shall not exceed the amount of Elective Deferrals on
behalf of any Highly Compensated Participant for any Plan
Year;
(iii) shall be treated as after-tax voluntary Employee
contributions for purposes of Code Section 401(a)(4) and
Regulation 1.401(k)-1(b). However, for purposes of Sections
4.3(f) and 9.2 (top heavy rules), recharacterized Excess
Contributions continue to be treated as Employer
contributions that are Elective Deferrals. Excess
Contributions (and "Income" attributable to such amounts)
recharacterized as after-tax voluntary Employee
contributions shall continue to be nonforfeitable and
subject to the same distribution rules provided for in
Section 12.2(c); and
(iv) are not permitted if the amount recharacterized plus
after-tax voluntary Employee contributions actually made by
such Highly Compensated Participant, exceed the maximum
amount of after-tax voluntary Employee contributions
(determined prior to application of Section 12.6) that such
Highly Compensated Participant is permitted to make under
the Plan in the absence of recharacterization.
(3) Any distribution and/or recharacterization of less than the
entire amount of Excess Contributions shall be treated as a pro
rata distribution and/or recharacterization of Excess
Contributions and "Income."
(4) For the purpose of this Section, "Income" means the income or
losses allocable to Excess Contributions, which amount shall be
allocated at the same time and in the same manner as income or
losses are allocated pursuant to Section 4.3(c). However,
"Income" for the period between the end of the Plan Year and the
date of the distribution (the "gap period") is not required to be
distributed.
(5) Excess Contributions shall be treated as Employer
contributions for purposes of Code Sections 404 and 415 even if
distributed from the Plan.
(c) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year (or, if the Prior Year Testing method is
used, within twelve (12) months after the end of the prior Plan Year),
the Employer may make a special Qualified Non-Elective Contribution or
Qualified Matching Contribution in accordance with one of the
following provisions which contribution shall be allocated to the
Qualified Non-Elective Contribution Account or Qualified Matching
Contribution Account of each Non-Highly Compensated Participant
eligible to share in the allocation in accordance with such provision.
The Employer shall provide the Administrator with written notification
of the amount of the contribution being made and to which provision it
relates.
(1) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
107
allocated in the same proportion that each Non-Highly Compensated
Participant's 414(s) Compensation for the year (or prior year if
the Prior Year Testing method is being used) bears to the total
414(s) Compensation of all Non-Highly Compensated Participants
for such year.
(2) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated in the same proportion that each Non-Highly Compensated
Participant's 414(s) Compensation for the year (or prior year if
the Prior Year Testing method is being used) bears to the total
414(s) Compensation of all Non-Highly Compensated Participants
for such year. However, for purposes of this contribution,
Non-Highly Compensated Participants who are not employed at the
end of the Plan Year (or at the end of the prior Plan Year if the
Prior Year Testing method is being used) and, if this is a
standardized Plan, who have not completed more than 500 Hours of
Service (or three (3) consecutive calendar months if the Elapsed
Time Method is selected in the Adoption Agreement) during such
Plan Year, shall not be eligible to share in the allocation and
shall be disregarded.
(3) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated in equal amounts (per capita).
(4) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated in equal amounts (per capita). However, for purposes of
this contribution, Non-Highly Compensated Participants who are
not employed at the end of the Plan Year (or at the end of the
prior Plan Year if the Prior Year Testing method is being used)
and, if this is a standardized Plan, who have not completed more
than 500 Hours of Service (or three (3) consecutive calendar
months if the Elapsed Time Method is selected in the Adoption
Agreement) during such Plan Year, shall not be eligible to share
in the allocation and shall be disregarded.
(5) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated to the Qualified Non-Elective Contribution Account of
the Non-Highly Compensated Participant having the lowest 414(s)
Compensation, until one of the tests set forth in Section 12.4 is
satisfied (or is anticipated to be satisfied), or until such
Non-Highly Compensated Participant has received the maximum
"Annual Addition" pursuant to Section 4.4. This process shall
continue until one of the tests set forth in Section 12.4 is
satisfied (or is anticipated to be satisfied).
108
(6) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated to the Qualified Non-Elective Contribution Account of
the Non-Highly Compensated Participant having the lowest 414(s)
Compensation, until one of the tests set forth in Section 12.4 is
satisfied (or is anticipated to be satisfied), or until such
Non-Highly Compensated Participant has received the maximum
"Annual Addition" pursuant to Section 4.4. This process shall
continue until one of the tests set forth in Section 12.4 is
satisfied (or is anticipated to be satisfied). However, for
purposes of this contribution, Non-Highly Compensated
Participants who are not employed at the end of the Plan Year (or
at the end of the prior Plan Year if the Prior Year Testing
method is being used) and, if this is a standardized Plan, who
have not completed more than 500 Hours of Service (or three (3)
consecutive calendar months if the Elapsed Time Method is
selected in the Adoption Agreement) during such Plan Year, shall
not be eligible to share in the allocation and shall be
disregarded.
(7) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated to the Qualified Matching Contribution Account of each
Non-Highly Compensated Participant in the same proportion that
each Non-Highly Compensated Participant's Elective Deferrals for
the year bears to the total Elective Deferrals of all Non-Highly
Compensated Participants.
(8) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated to the Qualified Matching Contribution Account of each
Non-Highly Compensated Participant in the same proportion that
each Non-Highly Compensated Participant's Elective Deferrals for
the year bears to the total Elective Deferrals of all Non-Highly
Compensated Participants. However, for purposes of this
contribution, Non-Highly Compensated Participants who are not
employed at the end of the Plan Year (or at the end of the prior
Plan Year if the Prior Year Testing method is being used) and, if
this is a standardized Plan, who have not completed more than 500
Hours of Service (or three (3) consecutive calendar months if the
Elapsed Time Method is selected in the Adoption Agreement) during
such Plan Year, shall not be eligible to share in the allocation
and shall be disregarded.
(9) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated to the Qualified Matching Contribution Account of the
Non-Highly Compensated Participant having the lowest Elective
Deferrals until one of the tests set forth in Section 12.4 is
satisfied (or is anticipated to be satisfied), or until such
Non-Highly Compensated Participant has received the maximum
109
"Annual Addition" pursuant to Section 4.4. This process shall
continue until one of the tests set forth in Section 12.4 is
satisfied (or is anticipated to be satisfied).
(10) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated to the Qualified Matching Contribution Account of the
Non-Highly Compensated Participant having the lowest Elective
Deferrals until one of the tests set forth in Section 12.4 is
satisfied (or is anticipated to be satisfied), or until such
Non-Highly Compensated Participant has received the maximum
"Annual Addition" pursuant to Section 4.4. This process shall
continue until one of the tests set forth in Section 12.4 is
satisfied (or is anticipated to be satisfied). However, for
purposes of this contribution, Non-Highly Compensated
Participants who are not employed at the end of the Plan Year (or
at the end of the prior Plan Year if the Prior Year Testing
method is being used) and, if this is a standardized Plan, who
have not completed more than 500 Hours of Service (or three (3)
consecutive calendar months if the Elapsed Time Method is
selected in the Adoption Agreement) during such Plan Year, shall
not be eligible to share in the allocation and shall be
disregarded.
(d) Any Excess Contributions (and "Income") which are distributed
on or after 2 1/2 months after the end of the Plan Year shall be
subject to the ten percent (10%) Employer excise tax imposed by Code
Section 4979.
12.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) Except as otherwise provided herein, this subsection applies
if the Prior Year Testing method is elected in the Adoption Agreement.
The "Actual Contribution Percentage" (hereinafter "ACP") for
Participants who are Highly Compensated Employees (hereinafter "HCEs")
for each Plan Year and the prior year's ACP for Participants who were
Non-Highly Compensated Employees (hereinafter "NHCEs") for the prior
Plan Year must satisfy one of the following tests:
(1) The ACP for a Plan Year for Participants who are HCEs for the
Plan Year shall not exceed the prior year's ACP for Participants
who were NHCEs for the prior Plan Year multiplied by 1.25; or
(2) The ACP for a Plan Year for Participants who are HCEs for the
Plan Year shall not exceed the prior year's ACP for Participants
who were NHCEs for the prior Plan Year multiplied by 2.0,
provided that the ACP for Participants who are HCEs does not
exceed the prior year's ACP for Participants who were NHCEs in
the prior Plan Year by more than two (2) percentage points.
Notwithstanding the above, for purposes of applying the foregoing
tests with respect to the first Plan Year in which the Plan
permits any Participant to make Employee contributions, provides
for matching contributions, or both, the ACP for the prior year's
NHCEs shall be deemed to be three percent (3%) unless the
110
Employer has elected in the Adoption Agreement to use the current
Plan Year's ACP for these Participants. However, the provisions
of this paragraph may not be used if the Plan is a successor plan
or is otherwise prohibited from using such provisions pursuant to
IRS Notice 98-1 (or superseding guidance).
(b) Notwithstanding the preceding, if the Current Year Testing
method is elected in the Adoption Agreement, the ACP tests in (a)(1)
and (a)(2), above shall be applied by comparing the current Plan
Year's ACP for Participants who are HCEs with the current Plan Year's
ACP (rather than the prior Plan Year's ACP) for Participants who are
NHCEs for the current Plan Year. Once made, this election can only be
changed if the Plan meets the requirements for changing to the Prior
Year Testing method set forth in IRS Notice 98-1 (or superseding
guidance). Furthermore, this Plan must use the same testing method for
both the ADP and ACP tests for Plan Years beginning on or after the
date the Employer adopts its GUST restated plan.
(c) This subsection applies to prevent the multiple use of the
test set forth in subsection (a)(2) above. Any HCE eligible to make
Elective Deferrals pursuant to Section 12.2 and to make after-tax
voluntary Employee contributions or to receive matching contributions
under this Plan or under any other plan maintained by the Employer or
an Affiliated Employer, shall have either the actual deferral ratio
adjusted in the manner described in Section 12.5 or the actual
contribution ratio reduced in the manner described in Section 12.7 so
that the "Aggregate Limit" is not exceeded pursuant to Regulation
1.401(m)-2. The amounts in excess of the "Aggregate Limit" shall be
treated as either an Excess Contribution or an Excess Aggregate
Contribution. The ADP and ACP of the HCEs are determined after any
corrections required to meet the ADP and ACP tests and are deemed to
be the maximum permitted under such test for the Plan Year. Multiple
use does not occur if either the ADP or ACP of the HCEs does not
exceed 1.25 multiplied by the ADP and ACP of the NHCEs.
"Aggregate Limit" means the sum of (i) 125 percent of the greater of
the ADP of the NHCEs for the Plan Year or the ACP of such NHCEs under
the plan subject to Code Section 401 (m) for the Plan Year beginning
with or within the prior Plan Year of the cash or deferred arrangement
and (ii) the lesser of 200% or two plus the lesser of such ADP or ACP.
"Lesser" is substituted for "greater" in (i) above, and "greater" is
substituted for "lesser" after "two plus the" in (ii) above if it
would result in a larger Aggregate Limit. If the Employer has elected
in the Adoption Agreement to use the Current Year Testing method, then
in calculating the "Aggregate Limit" for a particular Plan Year, the
NHCEs ADP and ACP for that Plan Year, instead of the prior Plan Year,
is used.
(d) A Participant is a Highly Compensated Employee for a
particular Plan Year if the Participant meets the definition of a
Highly Compensated Employee in effect for that Plan Year. Similarly, a
Participant is a Non-highly Compensated Employee for a particular Plan
Year if the Participant does not meet the definition of a Highly
Compensated Employee in effect for that Plan Year.
111
(e) For the purposes of this Section and Section 12.7, ACP for a
specific group of Participants for a Plan Year means the average of
the "Contribution Percentages" (calculated separately for each
Participant in such group). For this purpose, "Contribution
Percentage" means the ratio (expressed as a percentage) of the
Participant's "Contribution Percentage Amounts" to the Participant's
414(s) Compensation. The actual contribution ratio for each
Participant and the ACP for each group, shall be calculated to the
nearest one-hundredth of one percent of the Participant's 414(s)
Compensation.
(f) "Contribution Percentage Amounts" means the sum of (i)
after-tax voluntary Employee contributions, (ii) Employer "Matching
Contributions" made pursuant to Section 12.1(a)(2) (including
Qualified Matching Contributions to the extent such Qualified Matching
Contributions are not used to satisfy the tests set forth in Section
12.4), (iii) Excess Contributions recharacterized as nondeductible
voluntary Employee contributions pursuant to Section 12.5, and (iv)
Qualified Non-Elective Contributions (to the extent not used to
satisfy the tests set forth in Section 12.4). However, "Contribution
Percentage Amounts" shall not include "Matching Contributions" that
are forfeited either to correct Excess Aggregate Contributions or due
to Code Section 401(a)(4) and the Regulations thereunder because the
contributions to which they relate are Excess Deferrals, Excess
Contributions, or Excess Aggregate Contributions. In addition,
"Contribution Percentage Amounts" may include Elective Deferrals
provided the ADP test in Section 12.4 is met before the Elective
Deferrals are used in the ACP test and continues to be met following
the exclusion of those Elective Deferrals that are used to meet the
ACP test.
(g) For purposes of determining the ACP and the amount of Excess
Aggregate Contributions pursuant to Section 12.7, only Employer
"Matching Contributions" (excluding "Matching Contributions" forfeited
or distributed pursuant to Section 12.2(e), 12.5(b), or 12.7(b))
contributed to the Plan prior to the end of the succeeding Plan Year
shall be considered. In addition, the Administrator may elect to take
into account, with respect to Employees eligible to have Employer
"Matching Contributions" made pursuant to Section 12.1(a)(2) or
after-tax voluntary Employee contributions made pursuant to Section
4.7 allocated to their accounts, elective deferrals (as defined in
Regulation 1.402(g)-I (b)) and qualified non-elective contributions
(as defined in Code Section 40 1 (m)(4)(C)) contributed to any plan
maintained by the Employer. Such elective deferrals and qualified
non-elective contributions shall be treated as Employer matching
contributions subject to Regulation 1.401 (m)-l (b)(2) which is
incorporated herein by reference. The Plan Year must be the same as
the plan year of the plan to which the elective deferrals and the
qualified non-elective contributions are made.
(h) In the event that this Plan satisfies the requirements of
Code Sections 401(a)(4), 401(m), or 410(b) only if aggregated with one
or more other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the ACP of
Employees as if all such plans were a single plan. Plans may be
aggregated in order to satisfy Code section 401 (m) only if they have
the same Plan Year.
112
Any adjustments to the NHCE ACP for the prior year will be made
in accordance with IRS Notice 98-1 and any superseding guidance,
unless the Employer has elected in the Adoption Agreement to use the
Current Year Testing method. Plans may be aggregated in order to
satisfy Code Section 401(k) only if they have the same Plan Year and
use the same ACP testing method.
(i) For the purposes of this Section, if an HCE is a Participant
under two (2) or more plans (other than an employee stock ownership
plan as defined in Code Section 4975(e)(7)) which are maintained by
the Employer or an Affiliated Employer to which "Matching
Contributions," nondeductible voluntary Employee contributions, or
both, are made, all such contributions on behalf of such HCE shall be
aggregated for purposes of determining such HCP's actual contribution
ratio. However, if the plans have different plan years, this paragraph
shall be applied by treating all plans ending with or within the same
calendar year as a single plan.
(j) For purposes of this Section and Section 12.7, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to have "Matching Contributions" made
pursuant to Section 12.1(a)(2) (whether or not a deferral election was
made or suspended pursuant to Section 12.2(g)) allocated to such
Participant's account for the Plan Year or to make salary deferrals
pursuant to Section 12.2 (if the Employer uses salary deferrals to
satisfy the provisions of this Section) or after-tax voluntary
Employee contributions pursuant to Section 4.7 (whether or not
nondeductible voluntary Employee contributions are made) allocated to
the Participant's account for the Plan Year.
(k) For purposes of this Section and Section 12.7, "Matching
Contribution" means an Employer contribution made to the Plan, or to a
contract described in Code Section 403(b), on behalf of a Participant
on account of a nondeductible voluntary Employee contribution made by
such Participant, or on account of a Participant's elective deferrals
under a plan maintained by the Employer.
(l) For purposes of determining the ACP and the amount of Excess
Aggregate Contributions pursuant to Section 12.7, only Elective
Deferrals, Qualified Non-Elective Contributions, "Matching
Contributions" and Qualified Matching Contributions contributed to the
Plan prior to the end of the twelve (12) month period immediately
following the Plan Year to which the contributions relate shall be
considered.
(m) Notwithstanding anything in this Section to the contrary, the
provisions of this Section and Section 12.7 may be applied separately
(or will be applied separately to the extent required by Regulations)
to each "plan" within the meaning of Regulation 1.401 (k)-l(g)(11).
Furthermore, for Plan Years beginning after December 31, 1998, the
provisions of Code Section 401(k)(3)(F) may be used to exclude from
consideration all Non-Highly Compensated Employees who have not
satisfied the minimum age and service requirements of Code Section
410(a)( I )(A).
12.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
113
(a) In the event (or, with respect to subsection (g) below when
the Prior Year Testing method is being used, if it is anticipated)
that for Plan Years beginning after December 31, 1996, the Plan does
not satisfy one of the tests set forth in Section 12.6, the
Administrator shall adjust Excess Aggregate Contributions or the
Employer shall make contributions pursuant to the options set forth
below or any combination thereof. However, if the Prior Year testing
method is being used and it is anticipated that the Plan might not
satisfy one of such tests, then the Employer may make contributions
pursuant to the options set forth in subsection (c) below.
(b) On or before the fifteenth day of the third month following
the end of the Plan Year, but in no event later than the close of the
following Plan Year the Highly Compensated Participant having the
largest allocation of "Contribution Percentage Amounts" shall have a
portion of such "Contribution Percentage Amounts" (and "Income"
allocable to such amounts) distributed or, if non-Vested, Forfeited
(including "Income" allocable to such Forfeitures) until the total
amount of Excess Aggregate Contributions has been distributed, or
until the amount of the Participant's "Contribution Percentage
Amounts" equals the "Contribution Percentage Amounts" of the Highly
Compensated Participant having the next largest amount of
"Contribution Percentage Amounts." This process shall continue until
the total amount of Excess Aggregate Contributions has been
distributed or forfeited. Any distribution and/or Forfeiture of
"Contribution Percentage Amounts" shall be made in the following
order:
(1) Employer matching contributions distributed and/or forfeited
pursuant to Section 12.5(b)(1);
(2) After-tax voluntary Employee contributions including Excess
Contributions recharacterized as after-tax voluntary Employee
contributions pursuant to Section 12.5(b)(2);
(3) Remaining Employer matching contributions.
(c) Any distribution or Forfeiture of less than the entire amount
of Excess Aggregate Contributions (and "Income") shall be treated as a
pro rata distribution of Excess Aggregate Contributions and "Income."
Distribution of Excess Aggregate Contributions shall be designated by
the Employer as a distribution of Excess Aggregate Contributions (and
"Income"). Forfeitures of Excess Aggregate Contributions shall be
treated in accordance with Section 4.3. However, no such Forfeiture
may be allocated to a Highly Compensated Participant whose
contributions are reduced pursuant to this Section.
(d) For the purpose of this Section, "Income" means the income or
losses allocable to Excess Aggregate Contributions, which amount shall
be allocated at the same time and in the same manner as income or
losses are allocated pursuant to Section 4.3(c). However, "Income" for
the period between the end of the Plan Year and the date of the
distribution (the "gap period") is not required to be distributed.
114
(e) Excess Aggregate Contributions attributable to amounts other
than nondeductible voluntary Employee contributions, including
forfeited matching contributions, shall be treated as Employer
contributions for purposes of Code Sections 404 and 415 even if
distributed from the Plan.
(f) The determination of the amount of Excess Aggregate
Contributions with respect to any Plan Year shall be made after first
determining the Excess Contributions, if any, to be treated as
nondeductible voluntary Employee contributions due to
recharacterization for the plan year of any other qualified cash or
deferred arrangement (as defined in Code Section 401(k)) maintained by
the Employer that ends with or within the Plan Year or which are
treated as after-tax voluntary Employee contributions due to
recharacterization pursuant to Section 12.5.
(g) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year (or, if the Prior Year Testing method is
used, within twelve (12) months after the end of the prior Plan Year),
the Employer may make a special Qualified Non-Elective Contribution or
Qualified Matching Contribution in accordance with one of the
following provisions which contribution shall be allocated to the
Qualified Non-Elective Contribution Account or Qualified Matching
Contribution Account of each Non-Highly Compensated eligible to share
in the allocation in accordance with such provision. The Employer
shall provide the Administrator with written notification of the
amount of the contribution being made and for which provision it is
being made pursuant to.
(1) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.6. Such contribution shall be
allocated in the same proportion that each Non-Highly Compensated
Participant's 414(s) Compensation for the year (or prior year if
the Prior Year Testing method is being used) bears to the total
414(s) Compensation of all Non-Highly Compensated Participants
for such year.
(2) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.6. Such contribution shall be
allocated in the same proportion that each Non-Highly Compensated
Participant's 414(s) Compensation for the year (or prior year if
the Prior Year Testing method is being used) bears to the total
414(s) Compensation of all Non-Highly Compensated Participants
for such year. However, for purposes of this contribution,
Non-Highly Compensated Participants who are not employed at the
end of the Plan Year (or at the end of the prior Plan Year if the
Prior Year Testing method is being used) and, if this is a
standardized Plan, who have not completed more than 500 Hours of
Service (or three (3) consecutive calendar months if the Elapsed
Time Method is selected in the Adoption Agreement) during such
Plan Year, shall not be eligible to share in the allocation and
shall be disregarded.
115
(3) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.6. Such contribution shall be
allocated in equal amounts (per capita).
(4) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.6. Such contribution shall be
allocated in equal amounts (per capita). However, for purposes of
this contribution, Non-Highly Compensated Participants who are
not employed at the end of the Plan Year (or at the end of the
prior Plan Year if the Prior Year Testing method is being used)
and, if this is a standardized Plan, who have not completed more
than 500 Hours of Service (or three (3) consecutive calendar
months if the Elapsed Time Method is selected in the Adoption
Agreement) during such Plan Year, shall not be eligible to share
in the allocation and shall be disregarded.
(5) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.6. Such contribution shall be
allocated to the Qualified Non-Elective Contribution Account of
the Non-Highly Compensated Participant having the lowest 414(s)
Compensation, until one of the tests set forth in Section 12.6 is
satisfied (or is anticipated to be satisfied), or until such
Non-Highly Compensated Participant has received the maximum
"Annual Addition" pursuant to Section 4.4. This process shall
continue until one of the tests set forth in Section 12.6 is
satisfied (or is anticipated to be satisfied).
(6) A Qualified Non-Elective Contribution may be made on behalf
of Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.6. Such contribution shall be
allocated to the Qualified Non-Elective Contribution Account of
the Non-Highly Compensated Participant having the lowest 414(s)
Compensation, until one of the tests set forth in Section 12.6 is
satisfied (or is anticipated to be satisfied), or until such
Non-Highly Compensated Participant has received the maximum
"Annual Addition" pursuant to Section 4.4. This process shall
continue until one of the tests set forth in Section 12.6 is
satisfied (or is anticipated to be satisfied). However, for
purposes of this contribution, Non-Highly Compensated Employees
who are not employed at the end of the Plan Year (or at the end
of the prior Plan Year if the Prior Year Testing method is being
used) and, if this is a standardized Plan, who have not completed
more than 500 Hours of Service (or three (3) consecutive calendar
months if the Elapsed Time Method is selected in the Adoption
Agreement) during such Plan Year, shall not be eligible to share
in the allocation and shall be disregarded.
(7) A "Matching Contribution" may be made on behalf of Non-Highly
Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth
116
in Section 12.6. Such contribution shall be allocated on behalf
of each Non-Highly Compensated Participant in the same proportion
that each Non-Highly Compensated Participant's Elective Deferrals
for the year bears to the total Elective Deferrals of all
Non-Highly Compensated Participants. The Employer shall
designate, at the time the contribution is made, whether the
contribution made pursuant to this provision shall be a Qualified
Matching Contribution allocated to a Participant's Qualified
Matching Contribution Account or an Employer NonElective
Contribution allocated to a Participant's Non-Elective Account.
(8) A "Matching Contribution" may be made on behalf of Non-Highly
Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth
in Section 12.6. Such contribution shall be allocated on behalf
of each Non-Highly Compensated Participant in the same proportion
that each Non-Highly Compensated Participant's Elective Deferrals
for the year bears to the total Elective Deferrals of all
Non-Highly Compensated Participants. The Employer shall
designate, at the time the contribution is made, whether the
contribution made pursuant to this provision shall be a Qualified
Matching Contribution allocated to a Participant's Qualified
Matching Contribution Account or an Employer NonElective
Contribution allocated to a Participant's Non-Elective Account.
However, for purposes of this contribution, Non-Highly
Compensated Participants who are not employed at the end of the
Plan Year (or at the end of the prior Plan Year if the Prior Year
Testing method is being used) and, if this is a standardized
Plan, who have not completed more than 500 Hours of Service (or
three (3) consecutive calendar months if the Elapsed Time Method
is selected in the Adoption Agreement) during such Plan Year,
shall not be eligible to share in the allocation and shall be
disregarded.
(9) A "Matching Contribution" may be made on behalf of Non-Highly
Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth
in Section 12.4. Such contribution shall be allocated on behalf
of the Non-Highly Compensated Participant having the lowest
Elective Deferrals until one of the tests set forth in Section
12.4 is satisfied (or is anticipated to be satisfied), or until
such Non-Highly Compensated Participant has received the maximum
"Annual Addition" pursuant to Section 4.4. This process shall
continue until one of the tests set forth in Section 12.4 is
satisfied (or is anticipated to be satisfied). The Employer shall
designate, at the time the contribution is made, whether the
contribution made pursuant to this provision shall be a Qualified
Matching Contribution allocated to a Participant's Qualified
Matching Contribution Account or an Employer Non-Elective
Contribution allocated to a Participant's Non-Elective Account.
(10) A "Matching Contribution" may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 12.4. Such contribution shall be
allocated on behalf of the Non-Highly Compensated Participant
having the lowest Elective Deferrals until one of the tests set
forth in Section 12.4 is satisfied (or is anticipated to be
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satisfied), or until such Non-Highly Compensated Participant has
received the maximum "Annual Addition" pursuant to Section 4.4.
This process shall continue until one of the tests set forth in
Section 12.4 is satisfied (or is anticipated to be satisfied).
The Employer shall designate, at the time the contribution is
made, whether the contribution made pursuant to this provision
shall be a Qualified Matching Contribution allocated to a
Participant's Qualified Matching Contribution Account or an
Employer Non-Elective Contribution allocated to a Participant's
Non-Elective Account. However, for purposes of this contribution,
Non-Highly Compensated Participants who are not employed at the
end of the Plan Year (or at the end of the prior Plan Year if the
Prior Year Testing method is being used) and, if this is a
standardized Plan, who have not completed more than 500 Hours of
Service (or three (3) consecutive calendar months if the Elapsed
Time Method is selected in the Adoption Agreement) during such
Plan Year, shall not be eligible to share in the allocation and
shall be disregarded.
(h) Any Excess Aggregate Contributions (and "Income") which are
distributed on or after 2 1/2 months after the end of the Plan Year
shall be subject to the ten percent (10%) Employer excise tax imposed
by Code Section 4979.
12.8 SAFE HARBOR PROVISIONS
(a) The provisions of this Section will apply if the Employer has
elected, in the Adoption Agreement, to use the "ADP Test Safe Harbor"
or "ACP Test Safe Harbor." If the Employer has elected to use the "ADP
Test Safe Harbor" for a Plan Year, then the provisions relating to the
ADP test described in Section 12.4 and in Code Section 401(k)(3) do
not apply for such Plan Year. In addition, if the Employer has also
elected to use the "ACP Test Safe Harbor" for a Plan Year, then the
provisions relating to the ACP test described in Section 12.6 and in
Code Section 401 (m)(2) do not apply for such Plan Year. Furthermore,
to the extent any other provision of the Plan is inconsistent with the
provisions of this Section, the provisions of this Section will
govern.
(b) For purposes of this Section, the following definitions
apply:
(1) "ACP Test Safe Harbor" means the method described in
subsection (c) below for satisfying the ACP test of Code Section
401(m)(2).
(2) "ACP Test Safe Harbor Matching Contributions" means "Matching
Contributions" described in subsection (d)(1).
(3) "ADP Test Safe Harbor" means the method described in
subsection (c) for satisfying the ADP test of Code Section
401(k)(3).
(4) "ADP Test Safe Harbor Contributions" means "Matching
Contributions" and nonelective contributions described in
subsection (c)(1) below.
(5) "Compensation" means Compensation as defined in Section 1.
11, except, for purposes of this Section, no dollar limit, other
than the limit imposed by Code Section 401(a)(17), applies to the
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Compensation of a Non-Highly Compensated Employee. However,
solely for purposes of determining the Compensation subject to a
Participant's deferral election, the Employer may use an
alternative definition to the one described in the preceding
sentence, provided such alternative definition is a reasonable
definition within the meaning of Regulation 1.414(s)-1(d)(2) and
permits each Participant to elect sufficient Elective Deferrals
to receive the maximum amount of "Matching Contributions"
(determined using the definition of Compensation described in the
preceding sentence) available to the Participant under the Plan.
(6) "Eligible Participant" means a Participant who is eligible to
make Elective Deferrals under the Plan for any part of the Plan
Year (or who would be eligible to make Elective Deferrals but for
a suspension due to a hardship distribution described in Section
12.9 or to statutory limitations, such as Code Sections 402(g)
and 415) and who is not excluded as an "Eligible Participant"
under the 401(k) Safe Harbor elections in the Adoption Agreement.
(7) "Matching Contributions" means contributions made by the
Employer on account of an "Eligible Participant's" Elective
Deferrals.
(c) The provisions of this subsection apply for purposes of
satisfying the "ADP Test Safe Harbor."
(1) The "ADP Test Safe Harbor Contribution" is the contribution
elected by the Employer in the Adoption Agreement to be used to
satisfy the "ADP Test Safe Harbor." However, if no contribution
is elected in the Adoption Agreement, the Employer will
contribute to the Plan for the Plan Year a "Basic Matching
Contribution" on behalf of each "Eligible Employee." The "Basic
Matching Contribution" is equal to (i) onehundred percent (100%)
of the amount of an "Eligible Participant's" Elective Deferrals
that do not exceed three percent (3%) of the Participant's
"Compensation" for the Plan Year, plus (ii) fifty percent (50%)
of the amount of the Participant's Elective Deferrals that exceed
three percent (3%) of the Participant's "Compensation" but do not
exceed five percent (5%) of the Participant's "Compensation."
(2) Except as provided in subsection (e) below, for purposes of
the Plan, a Basic Matching Contribution or an Enhanced Matching
Contribution will be treated as a Qualified Matching Contribution
and a Nonelective Safe Harbor Contribution will be treated as a
Qualified Non-Elective Contribution. Accordingly, the "ADP Test
Safe Harbor Contribution" will be fully Vested and subject to the
distribution restrictions set forth in Section 12.2(c) (i.e., may
generally not be distributed earlier than separation from
service, death, disability, an event described in Section
401(k)(1), or, in case of a profit sharing plan, the attainment
of age 59 1/2.). In addition, such contributions must satisfy the
"ADP Test Safe Harbor" without regard to permitted disparity
under Code Section 401(1).
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(3) At least thirty (30) days, but not more than ninety (90)
days, before the beginning of the Plan Year, the Employer will
provide each "Eligible Participant" a comprehensive notice of the
Participant's rights and obligations under the Plan, written in a
manner calculated to be understood by the average Participant.
However, if an Employee becomes eligible after the 90th day
before the beginning of the Plan Year and does not receive the
notice for that reason, the notice must be provided no more than
ninety (90) days before the Employee becomes eligible but not
later than the date the Employee becomes eligible.
(4) In addition to any other election periods provided under the
Plan, each "Eligible Participant" may make or modify a deferral
election during the thirty (30) day period immediately following
receipt of the notice described in subsection (3) above.
Furthermore, if the "ADP Test Safe Harbor" is a "Matching
Contribution" each "Eligible Employee" must be permitted to elect
sufficient Elective Deferrals to receive the maximum amount of
"Matching Contributions" available to the Participant under the
Plan.
(d) The provisions of this subsection apply if the Employer has
elected to satisfy the "ACP Test Safe Harbor."
(1) In addition to the "ADP Test Safe Harbor Contributions," the
Employer will make any "Matching Contributions" in accordance
with elections made in the Adoption Agreement. Such additional
"Matching Contributions" will be considered "ACP Test Safe Harbor
Matching Contributions."
(2) Notwithstanding any election in the Adoption Agreement to the
contrary, an "Eligible Participant's" Elective Deferrals in
excess of six percent (6%) of "Compensation" may not be taken
into account in applying "ACP Test Safe Harbor Matching
Contributions." In addition, effective with respect to Plan Years
beginning after December 31, 1999, any portion of an "ACP Test
Safe Harbor Matching Contribution" attributable to a
discretionary "Matching Contribution" may not exceed four percent
(4%) of an "Eligible Participant's" "Compensation."
(e) The Plan is required to satisfy the ACP test of Code Section
401(m)(2), using the current year testing method, if the Plan permits
after-tax voluntary Employee contributions or if matching
contributions that do not satisfy the "ACP Test Safe Harbor" may be
made to the Plan. In such event, only "ADP Test Safe Harbor
Contributions" or "ACP Test Safe Harbor Contributions" that exceed the
amount needed to satisfy the "ADP Test Harbor" or "ACP Test Safe
Harbor" (if the Employer has elected to use the "ACP Test Safe
Harbor") may be treated as Qualified Nonelective Contributions or
Qualified Matching Contributions in applying the ACP test. In
addition, in applying the ACP test, elective contributions may not
treated as matching contributions under Code Section 401(m)(3).
Furthermore, in applying the ACP test, the Employer may elect to
disregard with respect to all "Eligible Participants" (I) all
"Matching Contributions" if the only "Matching Contributions" made to
the Plan satisfy the "ADP Test Safe Harbor Contribution" (the "Basic
Matching Contribution" or the "Enhanced Matching Contribution") and
(2) if the "ACP Test Safe Harbor" is satisfied, "Matching
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Contributions" that do not exceed four percent (4%) of each
Participant's "Compensation."
12.9 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of a Participant, shall
direct the Trustee to distribute to the Participant in any one Plan
Year up to the lesser of (1) 100% of the accounts as elected in the
Adoption Agreement valued as of the last Valuation Date or (2) the
amount necessary to satisfy the immediate and heavy financial need of
the Participant. Any distribution made pursuant to this Section shall
be deemed to be made as of the first day of the Plan Year or, if
later, the Valuation Date immediately preceding the date of
distribution, and the account from which the distribution is made
shall be reduced accordingly. Withdrawal under this Section shall be
authorized only if the distribution is for one of the following or any
other item permitted under Regulation 1.40 1 (k)- I (d)(2)(iv):
(1) Medical expenses described in Code Section 213(d) incurred by
the Participant, the Participant's spouse, or any of the
Participant's dependents (as defined in Code Section 152) or
necessary for these persons to obtain medical care as described
in Code Section 213(d);
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Payment of tuition and related educational fees, and room and
board expenses, for the next twelve (12) months of post-secondary
education for the Participant, the Participant's spouse,
children, or dependents (as defined in Code Section 152); or
(4) Payments necessary to prevent the eviction of the Participant
from the Participant's principal residence or foreclosure on the
mortgage on that residence.
(b) No distribution shall be made pursuant to this Section unless
the Administrator, based upon the Participant's representation and
such other facts as are known to the Administrator, determines that
all of the following conditions are satisfied:
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant (including
any amounts necessary to pay any federal, state, or local taxes
or penalties reasonably anticipated to result from the
distribution);
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently
available under all plans maintained by the Employer (to the
extent the loan would not increase the hardship);
(3) The Plan, and all other plans maintained by the Employer,
provide that the Participant's elective deferrals and
nondeductible voluntary Employee contributions will be suspended
121
for at least twelve (12) months after receipt of the hardship
distribution; and
(4) The Plan, and all other plans maintained by the Employer,
provide that the Participant may not make elective deferrals for
the Participant's taxable year immediately following the taxable
year of the hardship distribution in excess of the applicable
limit under Code Section 402(g) for such next taxable year less
the amount of such Participant's elective deferrals for the
taxable year of the hardship distribution.
(c) Notwithstanding the above, distributions from the
Participant's Elective Deferral Account, Qualified Matching
Contribution Account and Qualified Non-Elective Account pursuant to
this Section shall be limited solely to the Participant's Elective
Deferrals and any income attributable thereto credited to the
Participant's Elective Deferral Account as of December 31, 1988.
Furthermore, if a hardship distribution is permitted from more than
one account type, the Administrator may determine any ordering of a
Participant's hardship distribution from such accounts.
(d) Any distribution made pursuant to this Section shall be made
in a manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
ARTICLE XIII
SIMPLE 401(K) PROVISIONS
13.1 SIMPLE 401(K) PROVISIONS
(a) If elected in the Adoption Agreement, this Plan is intended
to be a SIMPLE 401(k) plan which satisfies the requirements of Code
Sections 401(k)(I I) and 401(m)(10).
(b) The provisions of this Article apply for a "year" only if the
following conditions are met:
(1) The Employer adopting this Plan is an "eligible employer." An
"eligible employer" means, with respect to any "year," an
Employer that had no more than 100 Employees who received at
least $5,000 of "compensation" from the Employer for the
preceding "year." In applying the preceding sentence, all
employees of an Affiliated Employer are taken into account.
An "eligible employer" that has elected to use the SIMPLE 401(k)
provisions but fails to be an "eligible employer" for any
subsequent "year," is treated as an "eligible employer" for the
two (2) "years" following the last "year" the Employer was an
"eligible employer." If the failure is due to any acquisition,
disposition, or similar transaction involving an "eligible
employer," the preceding sentence applies only if the provisions
of Code Section 41 0(b)(6)(C)(i) are satisfied.
122
(2) No contributions are made, or benefits accrued for services
during the "year," on behalf of any "eligible employee" under any
other plan, contract, pension, or trust described in Code Section
219(g)(5)(A) or (B), maintained by the Employer.
(c) To the extent that any other provision of the Plan is
inconsistent with the provisions of this Article, the provisions of
this Article govern.
13.2 DEFINITIONS
(a) "Compensation" means, for purposes of this Article, the sum
of the wages, tips, and other compensation from the Employer subject
to federal income tax withholding (as described in Code Section
6051(a)(3)) and the Employee's salary reduction contributions made
under this or any other 401(k) plan, and, if applicable, elective
deferrals under a Code Section 408(p) SIMPLE plan, a SARSEP, or a Code
Section 403(b) annuity contract and compensation deferred under a Code
Section 457 plan, required to be reported by the Employer on Form W-2
(as described in Code Section 6051(a)(8)). For self-employed
individuals, "compensation" means net earnings from self-employment
determined under Code Section 1402(a) prior to subtracting any
contributions made under this Plan on behalf of the individual. The
provisions of the plan implementing the limit on Compensation under
Code Section 401(a)(17) apply to the "compensation" under this
Article.
(b) "Eligible employee" means, for purposes of this Article, any
Participant who is entitled to make elective deferrals described in
Code Section 402(g) under the terms of the Plan.
(c) "Year" means the calendar year.
13.3 CONTRIBUTIONS
(a) Salary Reduction Contributions
(1) Each "eligible employee" may make a salary reduction election
to have "compensation" reduced for the "year" in any amount
selected by the Employee subject to the limitation in subsection
(c) below. The Employer will make a salary reduction contribution
to the Plan, as an Elective Deferral, in the amount by which the
Employee's "compensation" has been reduced.
(2) The total salary reduction contribution for the "year" cannot
exceed $6,000 for any Employee. To the extent permitted by law,
this amount will be adjusted to reflect any annual cost-of-living
increases announced by the IRS.
(b) Other Contributions
(1) Matching Contributions. Unless (2) below is elected, each
"year" the Employer will make a matching contribution to the Plan
on behalf of each Employee who makes a salary reduction election
under Section 13.3(a). The amount of the matching contribution
123
will be equal to the Employee's salary reduction contribution up
to a limit of three percent (3%) of the Employee's "compensation"
for the full "year."
(2) Nonelective Contributions. For any "year," instead of a
matching contribution, the Employer may elect to contribute a
nonelective contribution of two percent (2%) of "compensation"
for the "year" for each "eligible employee" who received at least
$5,000 of "compensation" from the Employer for the "year."
(c) Limitation on Other Contributions
No Employer or Employee contributions may be made to this Plan
for the "year" other than salary reduction contributions
described in Section 13.3(a), matching or nonelective
contributions described in Section 13.3(b) and rollover
contributions described in Regulation Section 1.402(c)-2,
Q&A-1(a). Furthermore, the provisions of Section 4.4 which
implement the limitations of Code Section 415 apply to
contributions made pursuant to this Section.
13.4 ELECTION AND NOTICE REQUIREMENTS
(a) Election Period
(1) In addition to any other election periods provided under the
Plan, each "eligible employee" may make or modify a salary
reduction election during the 60-day period immediately preceding
each January 1st.
(2) For the "year" an Employee becomes eligible to make salary
reduction contributions under this Article, the 60-day election
period requirement of subsection (a)(1) is deemed satisfied if
the Employee may make or modify a salary reduction election
during a 60-day period that includes either the date the Employee
becomes eligible or the day before.
(3) Each "eligible employee" may terminate a salary reduction
election at any time during the "year."
(b) Notice Requirements
(1) The Employer will notify each "eligible employee" prior to
the 60-day election period described in 13.4(a) that a salary
reduction election or a modification to a prior election may be
made during that
(2) The notification described in (1) above will indicate whether
the Employer will provide a matching contribution described in
Section 13.3(b)(1) or a two percent (2%) nonelective contribution
described in section 13.3(b)(2).
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13.5 VESTING REQUIREMENTS
All benefits attributable to contributions made pursuant to this
Article are nonforfeitable at all times, and all previous contributions made
under the Plan are nonforfeitable as of the beginning of the Plan Year that the
401(k) SIMPLE provisions apply.
13.6 TOP-HEAVY RULES
The Plan is not treated as a top heavy plan under Code Section 416
for any year for which the provisions of this Article are effective and
satisfied.
13.7 NONDISCRIMINATION TESTS
The Plan is treated as meeting the requirements of Code Sections 40
1 (k)(3)(A)(ii) and 401(m)(2) for any "year" for which the provisions of this
Article are effective and satisfied. Accordingly, Sections 12.4, 12.5, 12.6 and
12.7 shall not apply to the Plan.